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I agree. I think paper trading is extremely important because it
emphasizes the idea of process. Successful, unemotional trading (and
that's why all of you out there use Easy Language right?) is just a
process. It's a process of following rules. Without money, trading
becomes a process and more like the way real trading should feel. Real
trading is just making the numbers go up and down and so is paper trading.
No emotion. Either the numbers on your account balance are going up or
they are going down. That's all you should care about and that's what
paper trading forces you to focus on. Inexperienced traders may not feel
this way but experienced traders do. Your goal is to keep the numbers
small to the downsize and maximize the numbers to the up side. Until you
withdraw, that's as close as you come to the cash. Trading is all about
numbers and shouldn't be about anything else - emotions included. As long
as you're honest when you paper trade (never giving yourself the benefit of
the doubt on fills etc.), paper trading emulates successful trading more
closely than most realize.
Paper trading can also teach you some valuable lessons about yourself. I
found that paper trading forced me to deal with feelings of boredom. These
are feelings I had not expected to find and they influenced my performance
a great deal. I grew inattentive, missed opportunities, neglected stops,
etc. This forced me to reassess my expectations and reasons for trading.
I decided that, for me, the rewards far outweighed the costs and so I
found ways to deal with the boredom. These are techniques I continue to
use to this day and I'm sure I will continue to use. Without paper
trading, I wouldn't have known about them until I was playing with precious
money. This could have really cost me.
Brian.
-----Original Message-----
From: Philip Nixon [SMTP:xfs68@xxxxxxxxxxxxxx]
Sent: Friday, May 29, 1998 10:51 AM
To: Stan Katz; INTERNET:omega-list@xxxxxxxxxx
Subject: Re: Trading Advice
I don't want to bore people by coming back to the old paper trading
argument but I think it is important. It seems to me that as we all would
agree that back testing a mechanical system by using TS is essential then
how can back testing (i.e. paper trading) any system or method of trading
be wrong. I think it is dangerous to tell someone who has not traded
before to just dive in. Even if they trade small they can still end up
needlessly losing money and if you are limit down on a 1 lot for two or
three days you can still lose a respectable amount of money. As so many
have said before, it is not going to prove to you that you will make money
in the markets but it sure as hell will tell you very quickly if you wont.
I would suggest that anyone new to the markets should paper trade until
they are blue in the face. It will force them to concentrate on price
action and instill some discipline if nothing else.
Just my point of view.
Philip
----------
> From: Stan Katz <skat@xxxxxxxxxxxxxx>
> To: INTERNET:omega-list@xxxxxxxxxx
> Subject: Trading Advice
> Date: 29 May 1998 18:21
>
> I recommend the following books about trading (as opposed to technical
> analysis): "Computer Analysis of the Futures Market" by LeBeau and Lucas;
> "Street Smarts" by Connors & Raschke; "Trading for a Living" by Elder.
If
> you want to learn about Technical Analysis, try "Technical Analysis of
the
> Futures Markets" by Murphy. Avoid other peoples' systems; don't try
paper
> trading; and concentrate fully on how much you have at risk (and limit
> yourself to a specific dollar risk in every trade) instead of
concentrating
> on how much you can win.
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