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RT's,
Listen up especially new traders, this is the best treatise on the subject
of paper trading and whether you should or shouldn't do it, that I have
heard. Good job Dr. N of putting paper trading in its proper place. It
seems that it does little good to warn the enthusiastic new traders about
the challenges that confront them. Several times I suggested to new traders
that they trade mini contracts to start with. The first guy traded Coffee,
another traded Wheat when it was at the 96 high. Whipsaws got them both.
When I started, a broker told me to trade Cocoa. New traders, I suggest
that you don't trade Cocoa or anything that looks about like a pile of
pick-up-sticks(I'm refering to large ranges and very high volatility).
There are many ways to trade these markets, find out on paper if your ideas
pass the negative test, then start trading small. You may not get wealthy
next week but your odds of overall success is greatly enhanced.
Best Regards,
Brent
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> From: narayan c.k. <ckn58@xxxxxxxxxxx>
> To: realtraders@xxxxxxxxxxxxxx; troutman@xxxxxxxxxxxx
> Subject: RE: Trading for a Living ??
> Date: Monday, May 25, 1998 11:34 AM
>
> Mitch
> >
> >> Paper trading is bull---- by the way.
> >
> Paper trading is not bull. It is a systematic analysis tool: it's a
> negative filter.
>
> If one has an idea that appears to be profitable, then one should test
> it. To test a human process, which is what trading is, one needs to
> perform both positive and negative tests against both the mechanics of
> the activity and the human's ability to perform those mechanical steps.
> Put in less vague terms, you have to see how well the system works when
> it works, how badly it waxes you when it doesn't, and how easy it is to
> use day after day.
> Paper trading is an excellent way of identifying when an idea is a
> stupid one. If a signal or behavior or indicator can't stand up to
> paper trading for whatever reason, it's a good thing you didn't attempt
> to waste real money on it. It's one of the more efficient ways I've
> seen of throwing away bad ideas; it's fast and effective.
>
> Paper trading is NOT a good way to determine whether an idea will be
> successful, however. It's a negative filter: it tells you when the
> idea sucks, not when the idea is great and profitable. If a method
> passes paper trading tests, then there are other tests necessary to
> demonstrate success, including (hopefully)limited-capital exposure in
> real trading.
>
> But it's not bull unless it's mis-used.
>
>
> Troutman,
>
> Mitch is actually right.
>
> In paper trading one is driven by a will to succeed. In real trading
> one is driven by the fear of losing.
>
> And that, Sir, makes all the difference in the world.
>
> Dr.Narayan.
> Mumbai, India.
>
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