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Hi,
You probably, like me, have heard many traders disparage paper-trading as a
waste of time.
I used to believe that this was due to the following symptoms often being
related to a dislike of paper trading:
- lack of self-trust to use discipline unless money was involved,
- missing of the emotions of trading money,
- unwilling, through greed or urgency, to paper trade, trade in a penny
a point, building up the unit size slowly and steadily to what the
account value, trading skills, acceptable risk of ruin, personal
preferences, emotions... could effectively trade.
My overall conclusions were that such people were potentially a danger to
themselves (and others if CTA's) until they addressed their underlying
problems.
I still feel this is often true, but a story told to me recently has
suggested that the symptoms that often are associated with such rejection
of paper trading may be secondary factors - there may be a more insidious
problem at their root.
One of my longest standing friends is an unwilling scholar - based on being
asked to give a one-off lecture, he became a part-time academic at a UK
university. As examples of his lack of scholar-like attributes, he is a
successful investor in residential property; he has also succeeded in
persuading his not-for-profit college to allow him to run a new doctorate
course on a for-profit basis with him as the main shareholder.
So his story is somewhat self-deprecating and simultaneously poking fun at
his academic colleagues. According to him it is an old story - I hope you
like it.
A number of academics were enrolled in time of war into the
infantry. After training they all proved to be crack shots, capable of
hitting the bullseye far more often than any other recruits.
The time came for them to be sent into battle. As the enemy advanced, the
order was given to fire. Nobody moved. 'For goodness sake', shouted the
commanding officer, 'why don't you shoot?'
'How can we you fool', roared back one of the scholars, 'when we haven't
been trained to fire at people.'
If you have a scholarly view of trading, maybe, it is safer not to enter
the trenches.
So maybe, in a way, traders who see no value in paper trading are right -
they may not be fit for any kind of trading.
May your potential be realised, Ric.
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