How many trades should I make in a demo account before progressing onwards.

[forefit]

Right so I hear and read on this forum that you should trade and use a demo account for 4-6 months before going live (I personally feel it should be a bit longer)

Anyway my question is not how long should you trade in a demo account before moving on microlots (10p trades) but how many trades should i make before I progress onto microlots and be sure my system works (assuming im making consistent profits by then) and that I understand it all. The reason I ask is I'm trading weekly and daily charts, therefore I'm going to need more time.

This then kind of leads onto the question how many trades should I make trading 10p per pip before I move onto 20p per pip or should this just be determined by my account size and how much I want to risk each trade (2% of account MAX)?

 

[Splitlink]

Right so I hear and read on this forum that you should trade and use a demo account for 4-6 months before going live (I personally feel it should be a bit longer)

Anyway my question is not how long should you trade in a demo account before moving on microlots (10p trades) but how many trades should i make before I progress onto microlots and be sure my system works (assuming im making consistent profits by then) and that I understand it all. The reason I ask is I'm trading weekly and daily charts, therefore I'm going to need more time.

This then kind of leads onto the question how many trades should I make trading 10p per pip before I move onto 20p per pip or should this just be determined by my account size and how much I want to risk each trade (2% of account MAX)?

Start trading live when you have confidence but don't get overconfident. Everyone loses money on trades, it's part of it. Accept that and factor your losses in. Your account size should always dominate your trading size. If you overtrade and lose you are out of the game unless you enter more funds. That can be a slippery slope. Understand that your dealer may make demo trading look easier by not factoring spread and slippage in. The real thing is very different because emotions come into play.

At the same time, realise that you have to start sooner or later. I did not demo trade but I stayed small, 50p, for a very long time. Good luck.

 

[forefit]

Thanks but doesn't answer my question tho, how many trades is needed before you can say a that a system works? or isn't there a number?

By the way I don't want some smart **** to tell me that I would only truly know if a system works after I have done infinite trades or a million trades. Lets be realistic people.

 

[the hare]

Bear in mind that the error rate in a given variable is proportional to the square root of the number of observations. If your edge over random chance is only 2-3 percent, then this is proportional to the sort of error you might expect in a backtest comprised of 1000 trades. So if this is the case, you'll need a larger sample size in order to differentiate between signal and noise.

At T2W everyone has a huge statistical edge over and above random chance so this isnt a problem for them

This also assumes that market conditions remain similar, and the distribution in returns stays the same. In practice, market conditions change, and backtesting regardless of sample size will never give you anything thats worth very much (other than a statistical crutch which you might or might not want to lean on)

Probably not the answer you where looking for, but its the truth, and as such will be deleted as soon as the mods set eyes on it

 

[enragedcow]

i remember reading on this forum someone said demo accounts are a waste.

i jumped into trading as soon as my account was set up (kind of silly in hindsight) but i realize now that if i hadn't have done so and lost $400 i would never have had the "don't lose money" stop loss rule so firmly rooted in my mind.

i think for each person a demo varies in its usefulness, trading for real money means having to control emotions which a demo can't demonstrate (for want of a better word)

 

[TimYoung]

I would suggest instead of putting any time limit on how long to play on a demo account, better to give yourself a target to hit.

So pretend you have £1000 of play money and until you can grow that to x amount, don't start playing for real.

 

[Anita V]

I've also been told that you should give yourself a time limit otherwise you may never begin trading or you may have a string of luck and actually start too soon.

Above all though.. I don't think that what you're looking for exists! There is NO perfect time to begin and if there were, it would be different for everyone. I would personally err on the side of caution but it might be more beneficial for someone else to jump right in..

 

[TimYoung]

That is the point. If you can't make money trading play money, then you shouldn't trade no matter how long you have been practising.

If you think variance might get you to hit your target before you are ready, than set a higher target to minimise that chance.

How long you practise trading has little bearing on whether you are ready to trade. It is the results that matters and your track record is what can give you some baring on whether you know what you are doing.

 

[6am]

Why would you want to waste your time? Open a real account, lose money, move on.

 

[TimYoung]

Because the whole point people trade is to make money?

 

[forefit]

I rather lose demo money than real money....
Stupid question stupid answer

 

[TWD]

Your approach with paper trading should be more goal focused. When you've accomplish your goals you move on. Did you achieve the profitability you wanted, are you confident in what you learned, and did your experience cover a wide variety of market conditions?

In this instance you want to know if your sample size is large enough to stand the test of time. Identify the different types of markets that affect your strategy. Trade until you feel confident in your experience to handle theses different situations.

However you should also set time limits. Reassess your goals at the end of the end time period.

 

[brewski1984]

I believe you basically learn nothing from a demo. It's almost exactly the same as playing a demo account on poker... You'll call an all in on a flush draw even though you sit there saying to yourself you would never do it for real money because the odds say you shouldn't. Next thing you know you're in a cash game calling an all in to river a flush draw because the last time you hit it on a demo you made a fortune.

You learn the rules of poker on a demo account. You learn how to actually play poker when it costs you real money. Same with trading.

That's my opinion anyway.

 

[forker]

Forget what anyone tells you about demo accounts being pointless. They are only pointless if you disregard the trading process. The only difference between a demo and real account is orders being filled. The end result of a demo account and a real account is a function of all the associated facets involved with orders being filled. That being said it isn't a problem or a show stopper in the learning process. It's a great medium to follow the trading process and live test strategies without risking any money.
A trader isn't going to make money if they haven't created a successful strategy period. Deal with the emotions associated to real money once you have a strategy that has proven over a 6 month time span.
Why learn to trade with the added stress of losing money. Finding your way to consistency is hard enough without additional stress.

 

[TimYoung]

You should approach the way you trade demo and real the same way. But if you do take excessive risk because it is a demo, tho it will affect the size of your returns, it should actually lower your average returns and so probably won't hit the target if you set it high enough.

I think anybody with the mindset that think you learn nothing from a demo see trading more as gambling than learning a skill to make money and looking for that emotional hit of winning. Don't think it is the best way to approach trading.

 

[sizzler944]

3-4 years everyday.
Ignore all commentary.
Use simple charting, don't over elaborate.
Pay close attention to all central bank and govt actions and statements, to war and natural disasters.
Trade one item and don't budge however obvious it looks.
Learn to wait for "the moment of the sure thing", even if it takes months or years.
Move your stop to either protect profit or increase position.
Observe yourself constantly.

 

[Anita V]

I like sizzler944's concise list although I'd prefer not having to wait 3-4 years until I'm profitable. Who knew there was so much debate over whether to trade demo or not!

I'd have to agree with TimYoung, if you trade on demo as you would with real money there's no way that it can't be considered a valuable testing bed and learning tool.

 

[DionysusToast]

Thanks but doesn't answer my question tho, how many trades is needed before you can say a that a system works? or isn't there a number?

By the way I don't want some smart **** to tell me that I would only truly know if a system works after I have done infinite trades or a million trades. Lets be realistic people.

It depends what you mean by 'system'.

If you have a totally rules based system that uses no discretion but just a technical set of rules and it has been backtested on old data. It wont work anyway.

If you have a system that takes 100 x 1 tick trades a day, capitalizing on a tiny edge - you will need thousands of trades.

If you have a technique where you are making 2 or 3 trades a day, I'd say give it one month before going live.

When you go live - you have to start small. This would be an issue if you have a system that trades the ES and you have a $5k account.

There are so many variables here and the answers you want can only be given if you tell people what it is you are doing.

 

[DionysusToast]

3-4 years everyday.
Ignore all commentary.
Use simple charting, don't over elaborate.
Pay close attention to all central bank and govt actions and statements, to war and natural disasters.
Trade one item and don't budge however obvious it looks.
Learn to wait for "the moment of the sure thing", even if it takes months or years.
Move your stop to either protect profit or increase position.
Observe yourself constantly.

LOL @ 3-4 years, every day BEFORE making a live trade.

Yup - just take 3 or 4 years off work and you'll be fine. Then switch to live trading at the end of year 4 and you'll have no problems whatsoever. After all, live trading is just the same as SIM trading.

 

[DionysusToast]

I like sizzler944's concise list although I'd prefer not having to wait 3-4 years until I'm profitable. Who knew there was so much debate over whether to trade demo or not!

I'd have to agree with TimYoung, if you trade on demo as you would with real money there's no way that it can't be considered a valuable testing bed and learning tool.

Well, that's rather the point, isn't it.

You can't trade demo as you would with real money.

You can however play with small money. Hence we need a small money thread methinks....