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Basic Education for Beginner Trader


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Basic Education for Beginner Trader

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  #31 (permalink)
JWipper
brisbane, australia
 
 
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yperez953 View Post
I have been learning little by little and piece by piece over the past couple of years and have been trading on a sim TOS account, but It's like trying put a big puzzle
together.

my problem with this approach is how different sim trading is to real life trading. I dont believe you will learn "emotional management" unless your money is at risk IRL.

unfortunately, I do not know any traders who became successful without making big losses and big mistakes that cost them. IMO at the end of the day nothing teaches you better than losing big, because it is how you recover from that which determines your metal as a trader.

If you have been two years and only trading sims, I would be concerned that you wont be able to deal with the brutality of the market when it comes for your money. The only way to progress is to enter the fray. Sim trading will not help you do that at all.

I am not a fan of paper trading, except for developing strategies at the most basic level. The real test of a strategy comes when it has real loss attached and your emotional state influencing your decisions live.

Money management and risk size control will be the best thing you can learn moving forward imo, but I'd say get out there and lose some money. My biggest lessons hurt like hell and have involved 15% stupid single trade draw downs on my portfolio, and $14K lost on EURUSD in 3 weeks.

Take breaks when you lose, and forensic everything that happened, after that do not trade again until you know for certain your emotions have settled (assuming they ever do, some leave it for good because it's so brutal out there).

I am facing the same again right now, like going back to my beginning by Day Trading I know nothing about, and I have already lost 80% of the capital I put up to begin learning. But this is the way.

My fave analogy is the same as when I meet new drivers who are scared of hitting cars, I think the best thing they can do is rent a banger put on a helmet and drive it like a maniac around a car park smashing it up. You'll soon get over your fear that way. Trading is similar. You have to learn to lose well before you can ever hope to win. How you handle losing is the most important part of trading, imo. Time to get out there and lose some money learning!

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  #32 (permalink)
 matthew28 
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JWipper View Post
If you have been two years and only trading sims, I would be concerned that you wont be able to deal with the brutality of the market when it comes for your money. The only way to progress is to enter the fray. Sim trading will not help you do that at all.

I am not a fan of paper trading, except for developing strategies at the most basic level. The real test of a strategy comes when it has real loss attached and your emotional state influencing your decisions live.

Money management and risk size control will be the best thing you can learn moving forward imo, but I'd say get out there and lose some money. My biggest lessons hurt like hell and have involved 15% stupid single trade draw downs on my portfolio, and $14K lost on EURUSD in 3 weeks.

Take breaks when you lose, and forensic everything that happened, after that do not trade again until you know for certain your emotions have settled (assuming they ever do, some leave it for good because it's so brutal out there).

I am facing the same again right now, like going back to my beginning by Day Trading I know nothing about, and I have already lost 80% of the capital I put up to begin learning. But this is the way.

My fave analogy is the same as when I meet new drivers who are scared of hitting cars, I think the best thing they can do is rent a banger put on a helmet and drive it like a maniac around a car park smashing it up. You'll soon get over your fear that way. Trading is similar. You have to learn to lose well before you can ever hope to win. How you handle losing is the most important part of trading, imo. Time to get out there and lose some money learning!

I respectfully disagree with most of this. You have lost $14k in three weeks and in another thread you just posted you are losing 80% of your trades and asking advice from anonymous people on the internet to tell you what you are doing wrong.

Sim trading is there for a reason. If a person can't make money on sim then they aren't miraculously going to be able to make it live. Their trading methodology probably doesn't work consistently and they need to find a method that does by looking at the market and seeing what stands out for them and then building a strategy and trying it until they have one that works on sim. Only then when they have confidence in the method through building positive results that they can analyse and see are reasonably robust, do they put real money on the line and work on the emotional aspects added when trading real money.

People say they don't trade sim realistically which is why they think it is a waste of time. That's because they enjoy gambling instead or just the thrill of random rewards clicking buy and sell and they have no actual discipline or responsibility to follow their plan and practice properly or purposefully doing what they are supposed to do to help them learn. Instead they trade much larger size than they will with real money, because they value winning on sim more than sensible learning, doubling down again and again to avoid a loss, or adding to a winner with huge size to make back multiple losses. Or they have a well traded positive day in sim and view that as a wasted day because they didn't make real money. They are focused on financial results only, not on working to produce measurable improvement.

A professional in a field like sports will practice deliberately working on one aspect of their game again and again until they have mastered it through repetition analysis and correction. An amateur, such as a golfer, will go and play a round, or go to the driving range and whack the ball as far as they can and think they have worked on improving their performance.
It is analogous to a professional tennis player say analysing their stats and seeing they have an issue with back hand shots if they are forced in to that when close to the net. They will practice that shot repeatedly with their coach until they have confidence in it. They don't think that practice isn't worth it without the added pressure of a real match, so therefore not bother and hope in works out fine in the next competition.

Working on your emotions is irrelevant if your trading methodology has no edge. Trading psychology and emotional work are performance enhancement tools when one actually has a method producing a reasonable performance to enhance.
Losing money should hurt like hell, especially losing 80% of your capital but that doesn't mean that it is the only way to learn. Emotions are there to tell you when things are going badly, you don't fix that problem by waiting for your emotions to settle then carrying on again.
Learning to "lose well before you can ever hope to win", when you are trading an unproven/unprofitable system using real money isn't teaching you anything or helping you, all it is doing is teaching a bad methodology and poor habits while pissing real money up the wall. Fine if you can afford to lose $14k in three weeks or $20k a month just as a cost of learning, but most people take a long time to be profitable and not being prepared to sim trade realistically is going to cost a great deal of money.

If a person insists on trading real money, then switch to micros or some other smaller contract to at least give themselves time to learn before they blow out. Just my thoughts.

You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
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  #33 (permalink)
 bobwest 
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JWipper View Post
my problem with this approach is how different sim trading is to real life trading. I dont believe you will learn "emotional management" unless your money is at risk IRL.


matthew28 View Post
Sim trading is there for a reason. If a person can't make money on sim then they aren't miraculously going to be able to make it live....

Only then when they have confidence in the method through building positive results that they can analyse and see are reasonably robust, do they put real money on the line and work on the emotional aspects added when trading real money.

I think there is something in both of these.

Almost everyone discovers, to their surprise and frequently their horror, that when they have real cash on the line, everything changes. Their well-practiced sim method fails them (actually, they fail it) and the emotional issues they had relatively little problems with while in sim become major.

As a trader, you have to have some method that works well in itself, and you also have to execute it well when you trade it. The execution part is where the often out-of-control emotions can come in. So there is an argument for getting out of sim and into real-world trading in order to learn to deal with them. But once you are in real-world trading, you had better have a method that actually makes you money when you execute it properly, otherwise you will unemotionally go broke, just as much as the emotionally out of control trader will.

Once you have something that you believe you can trade effectively, it makes sense to try it out in a low-ish risk environment where you have a true risk to face, but not a ruinous one:


matthew28 View Post
If a person insists on trading real money, then switch to micros or some other smaller contract to at least give themselves time to learn before they blow out. Just my thoughts.

My thoughts too.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #34 (permalink)
CryptoBob
New York USA
 
 
Posts: 4 since Jun 2022
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JWipper View Post
my problem with this approach is how different sim trading is to real life trading. I dont believe you will learn "emotional management" unless your money is at risk IRL.

unfortunately, I do not know any traders who became successful without making big losses and big mistakes that cost them. IMO at the end of the day nothing teaches you better than losing big, because it is how you recover from that which determines your metal as a trader.

If you have been two years and only trading sims, I would be concerned that you wont be able to deal with the brutality of the market when it comes for your money. The only way to progress is to enter the fray. Sim trading will not help you do that at all.

I am not a fan of paper trading, except for developing strategies at the most basic level. The real test of a strategy comes when it has real loss attached and your emotional state influencing your decisions live.

Money management and risk size control will be the best thing you can learn moving forward imo, but I'd say get out there and lose some money. My biggest lessons hurt like hell and have involved 15% stupid single trade draw downs on my portfolio, and $14K lost on EURUSD in 3 weeks.

Take breaks when you lose, and forensic everything that happened, after that do not trade again until you know for certain your emotions have settled (assuming they ever do, some leave it for good because it's so brutal out there).

I am facing the same again right now, like going back to my beginning by Day Trading I know nothing about, and I have already lost 80% of the capital I put up to begin learning. But this is the way.

My fave analogy is the same as when I meet new drivers who are scared of hitting cars, I think the best thing they can do is rent a banger put on a helmet and drive it like a maniac around a car park smashing it up. You'll soon get over your fear that way. Trading is similar. You have to learn to lose well before you can ever hope to win. How you handle losing is the most important part of trading, imo. Time to get out there and lose some money learning!

I agree with you and I'm also not a fan of paper trading. Trading is all about risk management and you can't feel risk if you are not loosing real money.

A good friend of mine who is a professional trader over decades gave me the advice to only invest 1% of your capital per trade and to bet on compound interest. If your strategy works, 1% of your capital will be more and more money and on the other hand you don't loose all your capital right at the beginning when you are just building up a successful strategy.

This way you feel the pain because you loose money if trades doesn't work out well so you will work on your risk management

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  #35 (permalink)
 Nasdaq1517 
Honolulu Hawaii
 
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Risk management is everything if you ever find yourself risking more that 3% you will blow your account… (day trading) RISK MANAGEMENT … everyone has a strategy or a candlestick or a indicator … WINNERS MUST BE AT MINIMUM TWICE AS BIG AS LOSERS… if that’s not the case you will never be a full time trader…. RISK RISK RISK….risk per trade risk per day risk per week risk per month/year/career… if you risk too much you will get emotionally attached to a position so you won’t see it’s clearly a loser. RISK MANAGEMENT …… it’ll be a year or so before you are remotely profitable but if you know how to manage risk you’ll be able to slip the next stage of trading …. Just always enter the market with a Stop/Target/Context …. Cheers it’s a lifelong journey … everyone on YouTube is a fraud


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