Simulator versus Live Trading

[newbiedaytrader]

Hello All,

I am new to trading. I read a couple of investment / trading books, "The Next Big Investment Boom" by Mark Shipman, and "The Financial Spread Betting Handbook" by Malcolm Pryor.

Then I opened a simulator account with PaddyPowerTrader.com. In my first three days, I went from £10k to £21k by making no more than 20 trades a day, and for most trades I was in and out in under five minutes.

I know it is play money, but if I had followed the same strategy on a live system would I have had similar results, or are they enticing me with the simulator?

Thanks,
Newbie

 

[newbiedaytrader]

I have just read a few threads on the site and now realise that the technique I am using is called "Scalp Trading". :smart:

 

[MrGecko]

Newb,

Almost certainly your results are not realistic.

[I have no idea whatsoever about your profiency, approach, success rate, whatever - so speak up if I get any of this wrong, but.....]

20 days a day, for 5 mins a time, is far far too much trading to be doing with ans SB IMO - I should think in reality, the spread will be wider, you will get "slippage", stops targeted, orders bounced back, all sorts. I suggest you look to slow things down a bit, make fewer trades for longer, otherwise the little "nips and tucks" that the SB firm will give you live are going to wipe you out.

Secondly, (and again, speak up if I got it wrong), 100% in three days is only really possible if you put both your balls on the line, every time. Great when it works, but it's only got to go wrong once and.....

Tolerance for risk varies from trader to trader, but I would take a stab that the typical loss incurred before the trade is closed wouldn't exceed 4 or 5 % (and this is alot IMO) for prof. traders - there is no reset button in real life, if you lose it it's gone. Lose it all and not only are you poor, your out of a job, so take very good care of your capital.

What markets are you trading?

 

[MrGecko]

Scalping can only be properly done if you have DMA and are sitting next door to the exchange.

(well, not quite that close, but you get the point. It's the antithesis of spread betting)

 

[newbiedaytrader]

Thanks for the response. I was primarily trading Brent Crude July.

My principal is that if I go up or down by £500 I get out. I am putting £20 per point.

 

[newbiedaytrader]

Here are most of my trades from today.

11-Jun-08 16:00 2956620 System Brent Crude July Sell 20 133.32
11-Jun-08 15:50 2956470 System Brent Crude July Buy 20 133.47
(This was my last traded and the first one that I lost on!)

11-Jun-08 15:34 2956093 System Brent Crude July Sell 20 134.59
11-Jun-08 15:33 2956065 System Brent Crude July Buy 20 134.15

11-Jun-08 15:27 2955974 System Brent Crude July Buy 20 134.19
11-Jun-08 15:23 2955909 System Brent Crude July Sell 20 134.28

11-Jun-08 10:47 2952949 System Brent Crude July Buy 20 133.69
11-Jun-08 10:43 2952906 System Brent Crude July Sell 20 133.78

11-Jun-08 10:40 2952866 System Brent Crude July Buy 20 133.43
11-Jun-08 10:40 2952852 System Brent Crude July Sell 20 133.26

11-Jun-08 10:36 2952819 System Brent Crude July Buy 20 132.99
11-Jun-08 10:36 2952814 Engine Brent Crude July Sell 20 132.92

11-Jun-08 09:38 2952401 System Brent Crude July Buy 20 132.70
11-Jun-08 09:33 2952355 System Brent Crude July Sell 20 132.55

 

[MrGecko]

Spanish, the prodigy returns! (a little in joke, nothing personal).

OK, then your returns are definately unreliable. In this market, you can throw all fundamental and technical analysis out the window; It is doing it's own thing, and even seasoned pro's are scrathcing their heads in confusion.

Oil is widely regarded as one of the hardest products to trade. I'd suggest something a little tamer like FX or indices to start with.

 

[MrGecko]

There is a thread here that is excellent reading for you;

http://www.trade2win.com/boards/fir...67-should-i-hold-cut-loss-now.html#post441480

Read the posts of a "trader" by the name of Spanish89. If, at any time, you stop thinking "you bloody idiot", step away from the computer. If you want action like this, either spend a few years at a prop firm, or get a playstation.

 

[grantx]

NDT,

I rarely disagree with my friend, Mr Gecko (except when I'm right and he's wrong), but this is another example.

I would test your system at, say, £1 a point and see how it runs. Are your stops at 25 points (£500/£25)? I think this is OK. If you don't try it now, you'll be constantly thinking about it.

Although Mr Gecko suggests fx or indices, I think you are already partly convinced by oil, therefore you're probably taking a close interest in the fundamentals (OPEC, politics, etc) as well as the technicals. It may be beginner's luck or it could be a natural talent (can't judge from a handful of trades).

Stick with it and look to improve your strategy - greater or less exposure, timing, anticipation, etc.

Good luck.

Grant.

 

[MrGecko]

well, yes, I can't disagree with that.

Wasn't there a Nymex Pit that opened up in Dublin a few years ago? If you want to trade oil, there would be ideal.

 

[newbiedaytrader]

NDT,

I rarely disagree with my friend, Mr Gecko (except when I'm right and he's wrong), but this is another example.

I would test your system at, say, £1 a point and see how it runs. Are your stops at 25 points (£500/£25)? I think this is OK. If you don't try it now, you'll be constantly thinking about it.

Although Mr Gecko suggests fx or indices, I think you are already partly convinced by oil, therefore you're probably taking a close interest in the fundamentals (OPEC, politics, etc) as well as the technicals. It may be beginner's luck or it could be a natural talent (can't judge from a handful of trades).

Stick with it and look to improve your strategy - greater or less exposure, timing, anticipation, etc.

Good luck.

Grant.

Thanks Grant, and thanks Mr. Gecko.

That guy Spanish89 is funny. I got to page three and could read no more! Cringe!

I am going to keep working with my system on the simulator for a while longer and try to refine it. Then I intend to move into the live system at £1 a point. With regard to stops, I am putting my stop about 200 points out, but that is really a fail safe. I don't intend to let it get to there. I am sitting in front of my computers whenever I have a position open and if it goes 25 points against me I am pulling the plug. I was also aiming to pull the plug when I gain 25 points, but that is potentially limiting my gains.

I do find the Oil very interesting and it has been one of the few areas I have watched. I also won on Apple the other day when the iPhone announcement was being made. I won when the price dropped (chasing the trend) and also when the price went back up again chasing the trend.

( I hope I dont sound in any way like that spanish89 guy :cheesy

 

[newbiedaytrader]

well, yes, I can't disagree with that.

Wasn't there a Nymex Pit that opened up in Dublin a few years ago? If you want to trade oil, there would be ideal.

Looks like it closed down...

Irish Examiner - 2005/08/29: NYMEX ends trading in Dublin

 

[strongboes]

At the moment oil can move over $2 in a matter of seconds, you wouldn't be able to make sure you cut manually for a 25tick stop. Be careful my friend.

 

[zaslam]

Hi Newbiedaytrader

I'm working at paddypowertrader and quite often do one to one sessions with relatively new clients just to get people going. We were doing them in Dublin but are now stretching out to London and, at a push, Cork too. Let me know if you want one.

Without wanting to sit too firmly on the fence .... normally I'd advise new clients not to trade oil first but to start with indices. However if that's what you;ve started on and you can make it work, stick with it.

And to answer your original question, our demo platform is pretty similar to our live trading one apart from the fact that the prices are delayed by 15 minutes to avoid real-time exchange fees. But as long as you aren't deliberatly trying to cheat (by looking at a real-time price and then trading of the 15-mins ago price) it shouldn't be too much of an issue. The spreads are the same as the live platform and, no matter how hard we try to prevent it, slippage will occur in both the live and demo platform.

Finally MrGecko was spot on in his first reply to you. It is possible to get great results if you put large bets on, and with play money that's always tempting. But managing your capital is the key to it all. As he says, a lot of professionals wouldn't dream of risking any more than 5% of their bankroll on any one trade.

 

[newbiedaytrader]

Hi zaslam,

I would love to arrange a one to one session. I am based in Dublin. I do have a lot to learn! How can I arrange this?

There has definitely been a considerable element of beginners luck so far :clap:

When I was sitting in front of my computer this morning, and monitoring, I made three good quick trades and netted £1600. This is when I was disciplined.

Then I did a test, to see what would happen if I was sloppy and just "let it roll"!!!

I opened a position on oil, and then went out to vote on the Lisbon Treaty.

I decided not to change the default stop loss. Anyway, I got delayed when I was out, and didn't get back for a couple of hours. When I got back to my PC I saw that oil had plummetted more than 200 points and my stop loss had kicked in, down £4980! Thankfully it is only a demo system, but it does emphasise how much can be lost when you are foolish!

I am quite sure I would not have behaved in that way with real money, but I think I need to go back and do more practice before going "live".