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nwinski wrote:
> Paper trading is a valid and worthwhile way for beginning traders to
> learn about the markets and go thru the motions of trading. The more
> disciplined the trader is in following strict rules which similate
> actual trading the more likely they are to have the discipline to be
> successful traders. Those who complain that paper trades are nothing
> like real trades have not developed or maintained trading rules that
> similate an actual trading enviroment. By charging yourself commissions,
> a high slippage factor, and insisting that real time prices exceed your
> limits in order to record a fill, a near simulation is a very real
> possibility.
> If you adhere to these parameters, you should have a virutal simulation
> of real market conditions. Given this, if you can make substantial
> "paper" profits using at least 5 to 1 equity to margin requirements,
> over at least a six month period, you probably have a winning method of
> trading.
>
> Virtually,
>
> Norman
Agreed. You'll get no argument here. When done right, simiulated
trading can be a good approxiamation of the real thing.
Two problems though.
1) Most traders don't lose because they don't understand the mechanics
of the markets, they lose because emotion takes control of them because
real money is involved. There is no way to simulate that.
2) Your point is that paper trading can be a valid , necessary way to
learn the markets, but the proper parameters you suggest for accurate
paper trading are generally only known AND understood by market
veterans. Most newbies who need paper trading are not sophisticated
enough to create this highly disciplined approach to simulated trading.
You may have been the exception.
Eric
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