Why you shouldn't demo trade

[mpups]

insane video

 

[foroom lluzers]

What every trader needs to do ,is practice the art of losing , the art of getting kicked in the nuts.I think that what people fail to realize, is that there is a required learning curve in "the art of losing", as this goes against all we have been taught with our archaic education system.In trading everyone is taught "you will make money , how to make money and there is no psychology involved in losing or in trading".

Nobody is mentally prepared to lose or ready to lose.

 

[tar]

Didnt read the discussion , but demo trading can be beneficial , to try a broker , platform , new trading ideas ... etc , demo trading helped me immensely .

 

[Pat494]

To be fair Mike, that I agree with. Of course throw on some demo trades to get used to the platform but don't use it for pretending to actually trade. Games are just games and have no meaning. If there is money down, it becomes serious.

Think about how you play (if you do) a board game with friends or a games console, now imagine that every time you lost a life, you lost a grand, or, every time you landed on Mayfair (Monopoly), you had to pay the rent from your bank account.

Now think about how very different you would play these games.

Indeed they would be no longer games with your new rules and probably less enjoyable but that's me. Each to their own , eh ?

 

[foroom lluzers]

Indeed they would be no longer games with your new rules and probably less enjoyable but that's me. Each to their own , eh ?

It is not any games at all , he is talking about mentally living through discomfort , anxiety , stress , comfort zoning , emotions , loss aversion and other psychological demons .He is talking about the mental edge of traders , the edge required to be successful.There are no games to play here.

 

[Lee Shepherd]

Indeed they would be no longer games with your new rules and probably less enjoyable but that's me. Each to their own , eh ?

Pat, you've used key words here 'less enjoyable'. You're spot on. Now we see the clear difference from the 'fun' of trading to the absurdity of real life when you've worked your bollox off all month and yet had to pay for the privilege.

Foroom also hits on some great and main points. It's all about losing money and coping. If one gets upset, go home. Trading is not for you. It's easy to accept wins, handling the losses however is where it's at. Otherwise you could be the one on the bridge staring into the abyss wondering what the f**k just happened.

In my early years I was found crawling on the kitchen floor crying like a baby. That's a true story, although just a small one liner from the bigger picture. Mental health and strength is everything in this game.

And so, back to my opening post: don't demo trade. Put on real cash and see how you cope when you lose. If you don't mind losing, you won't mind winning.

 

[NVP]

simulation is useful in many areas of learning to trade ...

BUT

the art of losing cant be taught on Demo ........you have to "wear" it on live trading ...........

we are all deeply feeling emotional creatures......intelligent and sophisticated (apparently) but still deep down we are all ready to run at 100 mph when the sabre tooth tiger roars

so dont kid yourself ......start small and start to get used to losing at times ....otherwise you will never ever ever become a consistent and profitable trader

 

[foroom lluzers]

It's all about losing money and coping. If one gets upset, go home. Trading is not for you. It's easy to accept wins, handling the losses however is where it's at. Otherwise you could be the one on the bridge staring into the abyss wondering what the f**k just happened.

Hi Lee

My method is well designed and if you read the first post of it , it says the method is psychologically correct , it is a method that takes care of this loss of real money.

The method takes a risk of 20/30 ticks , writes off the risk on entry and immediately incurs a loss of 20/30 ticks by spending it on an option.It is already mentally ready to exit at a loss , if trade goes into a loss .This loss was expected at start of trade.It is easy to cope with my method.

On the contrary , your method and style of trading , gets hit with a sudden unexpected loss , arousing all the psychological demons and insulting your trading acumen.Your loss is made into a big deal , because you were not ready for it mentally , it then raises questions about the trade and yourself.It is hard to cope with this.

My method counters all the demons when I put on a trade and blocks them.You don't have a system , you do not believe in systems , therefore you are arousing your demons at a time of loss.I am not.

 

[seekingTruth16]

Isn't jumping in, clueless, maybe even reckless, the first approach of most people anyway? Historically, that doesn't turn out well.

It comes down to the question of whether you should learn a skill, e.g. swimming, by just being thrown into the water. For some activities, that might be the best thing. If the activity is simple enough that your instincts will direct you to perform the correct action, or safe enough that you can survive long enough to develop correct instincts, then go for it. For other activities that are more complex or more dangerous to play, you need education, training and practice.

Maybe in trading some people are wired to instinctively do the right thing (perhaps Lee is one!), so for them, Lee has given a good recommendation. But the research I've read shows that most people are naturally reacting badly in trading. Whether it's wrong views about probability and risk reward, over-leveraging, lack of knowledge of the market, chasing highs or doubling down, their natural instincts are off. So I think it would be the wrong approach for them to just keep trading live and losing.

You could say that the second set of people aren't meant for trading and they should give up, but there are successful traders who initially lost money. Or you can direct them to do more research, more thinking, get more education and more practice. Demo is part of that.

 

[brewski1984]

I can see the benefit of messing around with a demo account but in reality you learn barely anything from it. Crying like a baby and sleepless nights due to losing is where you find out who you are and a demo account will never give you that lesson.

Too many people stay focused on what they can win when they should be focused on what they could lose.

 

[brewski1984]

But the research I've read shows that most people are naturally reacting badly in trading. Whether it's wrong views about probability and risk reward, over-leveraging, lack of knowledge of the market, chasing highs or doubling down, their natural instincts are off. So I think it would be the wrong approach for them to just keep trading live and losing.

The thing is even if you demo traded for 6 months before ever placing a live trade, I'd bet that every single person would start doing those things once using real money.

 

[EnlightenedJoe]

Isn't jumping in, clueless, maybe even reckless, the first approach of most people anyway? Historically, that doesn't turn out well.

Historically, 99% of people lose whether they demo or not. This may seem terrible but it's not. Deductively, shops take money from the 99%. If one were to copy trade the shops, one would surely win.

People lose because they don't follow the real winners.

 

[brewski1984]

Historically, 99% of people lose whether they demo or not. This may seem terrible but it's not. Deductively, shops take money from the 99%. If one were to copy trade the shops, one would surely win.

People lose because they don't follow the real winners.

I'd also bet that if someone was to do the exact opposite trades of a loser, they'd still end up losing as well.

 

[EnlightenedJoe]

I'd also bet that if someone was to do the exact opposite trades of a loser, they'd still end up losing as well.

Possibly. But if you get out at the moment the loser is taken out, you would have won. But you are more of a hold until lose kinda guy. You are unhappy until you lose.

 

[foroom lluzers]

Possibly. But if you get out at the moment the loser is taken out, you would have won. But you are more of a hold until lose kinda guy. You are unhappy until you lose.

You are unhappy until you lose .

Do you become happy after a loss?

 

[EnlightenedJoe]

You are unhappy until you lose .

Do you become happy after a loss?

I don't lose.

 

[brewski1984]

Possibly. But if you get out at the moment the loser is taken out, you would have won. But you are more of a hold until lose kinda guy. You are unhappy until you lose.

I don't hold until I lose

 

[EnlightenedJoe]

I don't hold until I lose

Well, I got that impressions. My guts says so. It can't be completely wrong.

 

[wallstreetwarrior87]

Isn't jumping in, clueless, maybe even reckless, the first approach of most people anyway? Historically, that doesn't turn out well.

It comes down to the question of whether you should learn a skill, e.g. swimming, by just being thrown into the water. For some activities, that might be the best thing. If the activity is simple enough that your instincts will direct you to perform the correct action, or safe enough that you can survive long enough to develop correct instincts, then go for it.

Good example to use IMHO is swimming. So you want to learn the theory of swimming - you could mimic a swimming stoke in the air in your living room "imagining" what it would be like. You go a step further and use arm bands in the pool, but once again you have a support in place, keeping you safe in the knowledge that you wont sink, but there comes a time when you have to take those armbands off and go for it.

What to do?

Have a go, but in the small pool, where you can stand up if needed. Trading alternative being real market small stakes. You then begin to realise that you are NOT testing if you can swim or not, you are testing if you can handling the emotions of being in the water for real. You are not testing if you can trade (we can all press a buy/sell button), we are testing how we cope with emotional responses put upon us when in the heat of the battle. We are testing ourselves.

Trading is like most things in life in terms of - its ok to be wrong, we have another go, another chance to learn etc.

Shadow boxing springs to mind - My mate wanted to be a boxer until he realised he didnt like getting punched in the face. Just wasted 6 months in front of a mirror "imagining" that he was taking the blows, or should I say "simming".

All the posts have in my opinion, now come full circle to prove that we are testing our emotion receptors, and this can not be done without a physical implication in place to provide an environment to test this.

Once tested we can evaluate where we stand, and how we plan to move forward.

 

[seekingTruth16]

Good example to use IMHO is swimming. So you want to learn the theory of swimming - you could mimic a swimming stoke in the air in your living room "imagining" what it would be like. You go a step further and use arm bands in the pool, but once again you have a support in place, keeping you safe in the knowledge that you wont sink, but there comes a time when you have to take those armbands off and go for it.

What to do?

Have a go, but in the small pool, where you can stand up if needed. Trading alternative being real market small stakes. You then begin to realise that you are NOT testing if you can swim or not, you are testing if you can handling the emotions of being in the water for real. You are not testing if you can trade (we can all press a buy/sell button), we are testing how we cope with emotional responses put upon us when in the heat of the battle. We are testing ourselves.

Trading is like most things in life in terms of - its ok to be wrong, we have another go, another chance to learn etc.

Shadow boxing springs to mind - My mate wanted to be a boxer until he realised he didnt like getting punched in the face. Just wasted 6 months in front of a mirror "imagining" that he was taking the blows, or should I say "simming".

All the posts have in my opinion, now come full circle to prove that we are testing our emotion receptors, and this can not be done without a physical implication in place to provide an environment to test this.

Once tested we can evaluate where we stand, and how we plan to move forward.

Yes, there comes a time. But if you can't swim in a relatively safe environment like a shallow swimming pool, you aren't going to last long being thrown into the ocean with powerful waves. Plus the more unprepared or scared the person is, the faster they will drown. A safe place to learn first seems wise.

None of the things you mention, such as arm bands, swimming the shallow end is harmful to your survival, but not doing them and jumping in the ocean could be. I don't think many qualified swimmers would say to a swimming student, don't bother learning to swim in a pool first, just jump in the ocean with nobody around to save you and go for it. Or perhaps there are, it's just that there are few surviving students left to tell the story.

I get the point you and Lee are making. Even being a good swimmer in a pool isn't enough to make sure you can survive swimming in the ocean being battered by waves and cold and fear, many strong swimmers can't survive it. There are some lessons that can only be learned from that. But give yourself a fighting chance before you do.