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I've recently started getting my stuff together and I found a volume/price action strategy that I was having great results with in sim trading the ES. I traded nearly every day in April and was making great trades in the mornings for 1-2 points with 2 (sometimes 3) contracts totaling almost 80% return on my sim with a 67% win rate. I was ecstatic that after 6 years, I finally had a strategy and put it use in a sim account that I stuck with, had a plan, executed it, and was getting rewarded for it.
So I continued trading sim until this week where I can't seem to catch a break. Every single day in sim, I was either breakeven or up to +200-$300 each day. Now that I moved to live, I can't seem to find the same trades I was having such great success with. I know it's only been two days of live trading and I'm going to keep at it but my first day was -$100 and today was basically breakeven minus commissions.
Trades in April for me were plentiful but now recently in May, particularly since last Friday, I can't find the same type of trades as I did in April. For the more experienced traders, was April an odd month? Does my strategy only work in odd market conditions? Are off days/weeks just going to happen?
I plan to stick with it but its just disheartening after being diligent with live sim and market replay proving my strategy to come to starting off with bad days.
Why do you say that? I understand there's a much stronger emotional and psychological aspect to it when there's real money on the line. Wouldn't it help to train your strategy and practice finding good entries and exits and finding how/where to scale in and out?
Not really. @Big Mike is correct. The emotional aspect cannot be overstated. It's like masturbation, it feels good. But, its not quite like getting laid by some hot babe. Emily Ratajkowski immediately come to mind...again. In addition, the fills on SIM are an approximation of what you would receive in a live venue, not the actual thing, and are not representative of reality.
What you experienced in April is nothing more than random luck. There's even a law in probability theory that insures it. According to the "arc sine law," mechanical trading rules applied to price movements in financial assets will result in long periods of cumulative success, but equally long periods of cumulative failure. The long periods of success will tempt investors to apply trading rules to actual decisions. The long periods of failure make it very likely that such application will eventually blow them out of the market.
Plus, trading sim is (whether you admit it to yourself or not) is like trading with money you don't care if you lose.
The moment you trade cash, with leverage, in this market especially -- isn't it interesting how all that changes.
With sim, you always have a reason or rational as to why that particular trade was to be skipped or didn't qualify as valid or whatever the excuse is. With cash, it's a whole new ballgame.
Best advice (short) put away the sim entirely, trade micros with more than 1 contract with scale in/scale out strategy. Fund your account with 10x the ADR point value of whatever you are trading, per contract. That money is going to be gone. Accept it, it's like going to college to learn to trade. How many years does it take to become a Doctor? Be realistic and expect to pay up.
MES point value is $5 I believe, and ADR 50+ points a day lately. So 5x50 = 250 dollars per day in range, I recommend you have at minium 10x that calculation, meaning $2500 per contract for MES. And I recommend at least two contracts so you can scale in/out. So at least $5000 and make sure if you lose it all, much quicker than you ever expect, that you are 100% fine with that. It's tuition.
If you can't treat it like that, you are trading scared money. Do you think you have a chance to compete against others who aren't scared? I don't. This point cannot be understated.
Also, don't scalp. If ADR is 50, aim for at least 5 points at absolute minimum per trade. 10 makes more since (20% daily).
Last, read as many journals as you can. Watch as many webinars. Don't copy what others do, learn what NOT to do and take notes on what stands out, and make your own way. Best place on the site to learn right now is here:
Both Fed Chairman Bernanke’s remarks yesterday and President Obama’s speech last night about his jobs plan; combined, failed to reassure the market that a solution to the country’s economic woes was at hand, and the …
Like everyone said, Sim trading is pointless, except for learning the platform you are on. One time I lost $1700 on my "fun account" due to leaving an open limit buy order overnight...got filled while I was asleep and woke up to my account having only $300 left.
Once you get the hang of it, your April will look like my April last month. I won 80% of my trades, but I had some garbage trades for sure.
My April might also be a fluke. Except it's with real money. After this month I will know more.
Posting my results, only to boost your motivation if needed! It can be done, on real money yup.
Definitely as BigMike stated, when you consider the money to be risk capital that you can afford to lose, you'll essentially trade your method even better since you are not operating with scared money. Realize it will most likely be tuition if it's your 1st or 2nd account. Expect to blow 1 or 2 small accounts.
My biggest tip is to be flexible and not too rigid.
That reminds me, don't focus on win percentage. It doesn't matter, and is often a sign of inexperience and many vendors love to focus on that to lure in rookies. Don't fall for that.
Let me add, trading 60 times a day is ridiculous, in my opinion and experience. Only the broker makes money. You shouldn't even trade 60 times a month (per instrument), that's putting on a new position 3x a day which I think is crazy.
Much better to trade 1x per day and instead of scalping for ticks, hold for 10-20% of ADR at minimum.
Anyway, I'm done here -- rest is up to you, I've linked the single most informative/educational thread on the site right now above if you want to learn more.
I used to have a SIM journal here, not long ago. When I was active in it I was posed with lot of dilemma regarding validity of it in other sections of this forum.
Eventually I came to realize its mistake to invest time in SIM extensively and be dependent on it for measuring performance. I had it deleted.
While this is no bite of profound knowledge, I just wanted to mention that. Its better to try hand at micro even if losing some money. Like people say it, you need to have skin in the game. SIM doesn't do that and you end up carrying lot of bad habits which becomes problem in itself later when you are trading for real.
Before I begin let me say that compared to most on this forum I'm a beginner.
I will 100% agree about trading sim VS real money. I traded sim a little(probably should have been more) but the difference in making a decision with "sim" money and "real" money is huge, at least it was/is for me.
Ive been trying to learn as much as I can the last couple years. Finally decided a couple months ago to give it a go. Start small. Right now I'm only swing trading stocks on TSX(I'm from Canada). I thought I could do the day trading thing but quickly realized that it doesn't fit my risk profile, especially right now, it might later. Also, I didn't feel like losing my money that quick. I'm trading small sizes, because I don't want to get blown out, and trying to understand how I feel when I make the trade, but I wanted to do it "for real" because I felt like I was just clicking buttons and not understanding with the sim thing.
Having said that, using a sim is a good way to learn the platform.
Well thank you all for your responses. Looks like the past few days were indeed just a little odd since I found a bunch of trades today that I took and could've taken. Basically broke even again in the morning besides one trade around lunch I normally wouldn't have taken that put me a few points below breakeven. I suppose I'll learn eventually I decided to switch to the MES today and for the foreseeable future to get a feel for real money in the market without risking too much. It is a different feeling trading live but smaller size on the MES feels substantially much better emotionally. I keep taking profits too early (similar to what I did in sim) but I'll keep on keeping on.
I appreciate the advice weening me off of sim. I still like to think it had its place giving me confidence to execute but y'all are right in that it is still a different league to trade live. I'm not a fan of the 4x increase from ES to MES for commissions&fees/tick ratio but I suppose it's worth it to learn.
