Great on Paper - Not with Real Money

[MDS37RB 10]

Hi all: I'm relatively new only having been trading for about 8 months. I learned a price action method for day trading the e-minis a few weeks ago. The problem is when I'm using paper money, I do great and make great decisions on entries and exits. When I switch to real money, it all goes down the tubes and I generally lose money.

 

How do you overcome this mental obstacle? I know what I have to do and do it well when it doesn't count. When it counts I think I'm so fearful of further losses in my account that I don't make the same sound decisions as I do when its just paper money. I think I have psyched myself out.

 

Another problem I'm having is if I have a losing trade, I am frequently too anxious to get back in with another trade to get the poor trade "behind me" that I don't have the discipline to wait for another good set up, even though it may be hours away.

 

Thanks!

 

David Skerritt

Clearwater, FL

[steve46 12]

Welcome....sorry to hear about your problem....but you can take small comfort in knowing that you aren't the only one who has this problem....

 

The skill that you need to learn is called "emotional regulation"....in simplest terms it is the ability to manage the negative responses that might distract or cause you to make poor judgements...

 

By chance there is a recent thread where you can read some comments on this subject

 

http://www.traderslaboratory.com/forums/psychology/14410-saboteur-mind.html

 

I have my own opinion on this (post 7) and of course you can read more about it by simply researching the subject through google...or any search page for that matter.

 

and of course there are vendors who will (for a fee) provide you with magical incantations of all kinds that are guaranteed to turn you into the next Bill Gates or Warren Buffet....

 

Good luck

[SIUYA 11]

 

David Skerritt

Clearwater, FL

 

a tough obstacle......you may have to do a trial and error type of experiment to overcome this, as one size solution often does not fit everyone.

a few things that maybe worth trialing as an experiment....(disclaimer....these might also not suit you or be harmful)

 

1....in your paper trading account trade the exact same setups, but with 10 times the size you would in the real account....it gets you used to the swings in PL, and you will be less worried about the real money.

 

2....trade the paper account AND the real account at the same time, using the paper account to take trades, and then replicate it in the real one.....it might reveal exactly what you are thinking when switching between accounts as opposed to one on and one off.

 

3....it sounds like you have done some analysis on the reasons why you think differently....maybe you need to really reduce the size the real account. If its already so small only a one lot is traded, then it may simply be that you are undercapitalised, in which case every loss is going to hurt too much - too much heat - you need more money , (i dont think there is spreadbetting in the US like the UK to reduce size, and then build it up from there - but I would continue to paper trade while building up a bank, but trade larger size, get the mind used to it, and then reduce when using real money - ingrain good habits at least if practicing)

Edited October 6, 2012 by SIUYA

[MightyMouse 12]

I am assuming that you are discretionary trading.

 

It sounds like you are having a problem with execution. You either are having a problem executing your plan or you simply haven't defined your plan and are winging it, thinking you are smarter than the market. Additionally, you might be trading with too much size and the swings bother you.

 

You need to start with baby steps. Begin simply with a target and a stop and learn to stay in the trade no matter what. Right or wrong, winner or loser, you have got to learn to execute a simple set of rules. In the beginning it was helpful for me to walk away from the screens and deal with the fear away from the trade while I was in a trade. When you come back, either you had a winner, a loser or the market was up or down some from your entry. It helped me tame the fear I would feel and put it into perspective; it's an illusion. When the fear dulls, then add rules. Add them one at a time if you have too.

 

If your trade size is too big, then trade smaller. It might mean that you will have to abandon the instrument you are trading if, for instance, one lot is still too much for you. I have been doing this for a while and if I traded too much size I would probably have the same issues that you have. It could very well be that your account is too small to make enough money and you might have to put off trading.

 

You have to manage away your issues through properly executing rules and managing risk.

.

[Patuca 13]

Please listen to Mitsubishi aka livermore II. He openly claims to have blown 6 accounts. Experience speaks here..he he ha ha

Edited October 7, 2012 by Patuca

[Patuca 13]

or you could listen to mr steve46 and never blow another account LOL. with his reversion strategy you will soon be "in the money". just be humble and show no superior intelligence..

[steve46 12]

So Pissooka, do you ever have anything useful to say to people asking for help, or is this idiotic crap the full extent of your knowledge?

Edited October 7, 2012 by steve46

[Patuca 13]

So Pissooka, do you ever have anything useful to say to people asking for help, or is this idiotic crap the full extent of your knowledge?

oh shucks! I thought i was helping by referring him to two of our finest posters on TL.

[steve46 12]

Really.... and I thought you were just an ignorant ass looking to take a verbal whipping, perhaps we were both wrong....

[TheDude 10]

Hi all: I'm relatively new only having been trading for about 8 months. I learned a price action method for day trading the e-minis a few weeks ago. The problem is when I'm using paper money, I do great and make great decisions on entries and exits. When I switch to real money, it all goes down the tubes and I generally lose money.

 

How do you overcome this mental obstacle? I know what I have to do and do it well when it doesn't count. When it counts I think I'm so fearful of further losses in my account that I don't make the same sound decisions as I do when its just paper money. I think I have psyched myself out.

 

Another problem I'm having is if I have a losing trade, I am frequently too anxious to get back in with another trade to get the poor trade "behind me" that I don't have the discipline to wait for another good set up, even though it may be hours away.

 

Thanks!

 

David Skerritt

Clearwater, FL

 

FWIW:

 

Try 1 of these:

 

A. Keep paper trading in sim until you can make money in your sleep with out thinking about it. This could take another 3 months +. Dont put a time limit on this. It will happen eventually. Think of this drill as similar to the ones marines do when they can de-assemble, clean and assemble their rifle blindfolded perfectly. When you feel you are there, keep doing it for another month - just to make sure. You still wont make as much money when you go live, but it will be a big help.

 

B. Get a simpler set up. One thats really black and white. One where there is no guess work involved at all.

 

C. Just ditch the friggin' charts and all this 'price set up/price action/price pattern' stuff. Learn to read the order book. Just sit and watch for a month or 2. You will start to see the patterns and tricks that are played. Then start paper trading from your observations. Trade US 10yr notes, while watching 30 yr bonds. If you really must, trade ES. Dont bother with FX - fine for position/swing trading, not so great for true day trading.

 

All of these will seem like a lot more time & work. However it will save you time and work in the long run.

 

Option C will feel like you will be throwing away the last 8 months of effort. C will also take another 8 months until you start making money in all likely hood. This is why most cant be bothered and use charts - also why most lose.

[mickro 10]

The biggest reason for this, is comfort. So get comfortable with you system of trading.

 

The more you know about your own system, the better. This may sound silly because you likely created the system.

 

I assume you do trade journalling and hopefully something more active. So, get to know the statistics of your system. Learn how many trades you are supposed to win/lose, you're avg profit/loss, std deviation of wins/losses.. to name a few... Knowing typical and maximum drawdowns. Personally, I like to perform a Monte Carlo to learn the extremes.

 

Then follow the statistics! If you lose 100 trades in a row, you won't care b/c the typical draw down is much greater. Obviously, this will be specific to your system.

 

Know your leverage! Knowing your leverage will prevent you from going bankrupt waiting for a draw down to be over. Not to mention, black swans.

 

Remember that a lot of the best systems lose more than 50% of the time. This can be demoralizing if you let it. Our society is trained to shoot for percentages, this is definitely not the cause in trading.

 

This provides you the psychological relief of worrying about what's going on around you and you can focus on trading.

[Steve66 10]

Hi Dave,

 

I don't post much, but I can tell you every new trader is going or went through what you are experiencing. I went through it as well.

 

I suggest that you set aside a small amount of money that you can afford to give to charity, for example, $100.00 and paper trade it. Set aside .43 cents per contract round trip for commissions and $5.00 for every point lost per contract. Trade until you double your 100.00 investment covering commissions. Then, start trading real money. If you lose the hundred, donate it to whatever charity you support, and start over.

 

You can use any $ denomination you want depending on your trading strategy (single, multiple contracts, etc). I used 10% of what the /ES and commissions cost to trade.

 

A little skin in the game keeps you honest and helps psychologically. If you double your money, you get to trade your account funds. If you lose the money, you money is going to a good place instead of another traders pocket. You gain confidence and that gives you an edge

[Patuca 13]

Puker doesn't like people who openly admit things,neither does he like those who talk about their methods.

In fact,it is quite difficult to get the environment here just right for him.

No,i guess he feels happiest on his bicycle with the wind in what is left of his air tearing up the highway on the way to his next accident.

Apparently,he only comes here to practice playing with the little cartoons.

If he ever posts something..anything of any value whatsoever before all of us die,i reserve the right to post these before anyone else :shocked:. followed by...

:rofl::rofl::rofl::rofl:...and...:sleep::sleep:: before ending with..

hello Mit. I see you and steve46 are in good moods today. I refer the 8 month trader to the two posters that can help him navigate through this malarky he has found himself in and i get attacked. mr 8 month trader i am hereby withdrawing my recomendations. DO NOT and i repeat DO NOT follow the advice or systems that my two fellow posters make. as you can see they are quite emotional and we all know emotions do not work in the markets for successful traders. i expect more unsavory posts about me as the two kiddos pitch a fit. i may just have to get on moto and ride away into the setting sun which would probally suit them just fine. however..."i'll be back" as the movie actor says from your neck of the woods steve46

 

steve with his endless reverting back and mit with his e mini cooper and many math calculations make the perfect pair to keep the comedy show going but alas there is a huge pond that separates them. I leave it to 8 month trader to decide when one of them receives the "top rooster" trader of the month award. work hard boys if you want the reward! all you have to do is take a real beating in the market like you did last month or was that the last 24 months?:missy:

[Patuca 13]

oh no a steve46 and now a steve66. who will be steve86?

[Patuca 13]

Hi Dave,

 

I don't post much, but I can tell you every new trader is going or went through what you are experiencing. I went through it as well.

 

I suggest that you set aside a small amount of money that you can afford to give to charity, for example, $100.00 and paper trade it. Set aside .43 cents per contract round trip for commissions and $5.00 for every point lost per contract. Trade until you double your 100.00 investment covering commissions. Then, start trading real money. If you lose the hundred, donate it to whatever charity you support, and start over.

 

You can use any $ denomination you want depending on your trading strategy (single, multiple contracts, etc). I used 10% of what the /ES and commissions cost to trade.

 

A little skin in the game keeps you honest and helps psychologically. If you double your money, you get to trade your account funds. If you lose the money, you money is going to a good place instead of another traders pocket. You gain confidence and that gives you an edge

May I suggest the Patuca motorcycle fund as the charity to receive your funds? Thank you!

[tulanch 10]

Close to where I live is an expansive mining operation that has this one building with a very large writing on its side. It simply says “THINK”. I believe this is very profound when it comes to trading.

 

For me, I am not interest in learning by blowing out an account or giving money away. Yes perhaps that will happen, but my plan of attack will not include a per-defined procedure involving such steps. I am prepared to accept it may occur but it’s just a curve in the path along the journey.

 

In “live” mode I have lost money very quickly. So I went back to sim, then back live, then back in sim, then back live, then back in sim etc…and will continue to repeat this process until I prove to myself I am consistently profitable. Seems like an easy question to answer, but as example, do I count an unforeseen spike for or against me in this consensus? Am I reading the market correctly? Am I controlling my emotions? Am I taking trades that make sense in both hind sight and real time? I believe (mathematically know) all indicators are lagging, the move has already begun, but based on these can I still see at a HPLR trade (risk/reward)?

 

Keeping logs of your trades is important, but even more important is to review these notes. As example, I found in sim I was not as “true” as I thought. Sometime I would have a winner and let it ride. In “live” mode I found there was no way I could hold for an extended period of time. I learned I am most comfortable being a scalper, 5 minutes to me is an eternity. Thus I adjusted my trading plans accordingly. I believe If you are true to yourself in sim, treating sim as real, then live will be more in line with your experience, but with that said, live greed and fear are very strong emotions to control, done so by gaining confidence with yourself, with your approach.

 

I also found/learned that trading is extremely “personal”, what works for me most likely (more like absolutely) will not work for you. And furthermore what works for you, while interesting, I cannot not allow it to affect what I “do”. I will fine always tune what is working for me, I will adjust if it make sense to me, but only after THINKING. Adjustment thinking occurs after hours, not during trading; trading is a time to “do” not a time to alter the plan(s).

 

I know my goal –being consistent – this differs from perfection as perfection implies predicting the un-predictable. I believe one profits from adaptability in real time to what the market is doing, using predefined plans of action, an approach you only gain confidence in from 1000’s of hours of real time interaction.

[goodoboy 10]

Hi all: I'm relatively new only having been trading for about 8 months. I learned a price action method for day trading the e-minis a few weeks ago. The problem is when I'm using paper money, I do great and make great decisions on entries and exits. When I switch to real money, it all goes down the tubes and I generally lose money.

 

How do you overcome this mental obstacle? I know what I have to do and do it well when it doesn't count. When it counts I think I'm so fearful of further losses in my account that I don't make the same sound decisions as I do when its just paper money. I think I have psyched myself out.

 

Another problem I'm having is if I have a losing trade, I am frequently too anxious to get back in with another trade to get the poor trade "behind me" that I don't have the discipline to wait for another good set up, even though it may be hours away.

 

Thanks!

 

David Skerritt

Clearwater, FL

 

Hello Buddy,

 

I am trading paper money on ES as well. And its all emotional and second guessing yourself.

 

What I just added in my revised plan is to only look for 2-3 trades per day. I really want to scale it down to 2 trades per day.

 

By scaling down to less trades per day, it will force you to wait for the setup. But stay on it and realize your mistake and correct it. You are doing fine. Don't leave sim til you got it together.

[roztom 10]

A set-up should be well defined.. Typically homework is done, areas of interest identified and then depending on the open, range, rotations, etc...execute your plan.

 

(Many) Most successful traders do their thinking outside of market hours... homework. During the market typically it is a matter of executing based on several potential scenarios that have already been planned out and then unfold. The plan should not, imho, be hatched during the heat of battle.

 

When the markets open then it is waiting for the market to approach your area to do business and then execute based on your pre-defined set-ups. After your entry, then risk control, scaling to lay off risk and then target/exit management.

 

One thing that is important is to have a non-random entry/trade mgmt, exit process...

 

Example: One of the hardest things to do is to trade a 1 - lot... It is really important to trade at least 2.. The idea is to have a consistent/high probability scale out to reduce/eliminate risk (depending on your stop).

 

Typically the average rotation in the ES is 1.5 - 3.00 pts... Therefore it would make sense to enter potentially after a rotation greater than 3 pts (or more) if your setup shows and then assuming apx 1.5pts rotation you can get a scale to give your trade room but also take the pressure off.. Just a thought.. There are many ways to do it...

 

Assuming you are not trading randomly then you either have a fixed $ exit or a descretionary target for exit...

 

Just 2 cts here ... there are many here who may help... Trading is a very individualistic endeavor...it must become yours and fit your psycology. The mental game is the true obstacle... Good luck..

[eplum 10]

To the Original Poster,

 

Almost every trader will experience the problem of not executing properly. There are many subtle reasons for this, and it occurs at all levels (not just beginner).

 

However, the underlying reason for this is lack of confidence.

 

In your case particularly, you state you have only been trading 8 months, and more importantly only been trading a new system for a few weeks. I know if I were to switch to a new system, it would take me a lot more than a few weeks to be confident in that new system.

 

Your system may be solid, but at some level of conscious you don't believe that to be the case, and thus you undermine the system by trading differently when trading live.

 

My recommendation would be to head in the direction of building your confidence in your chosen system. One way this can be done is by trading the sim successfully for months and/or 100s of trades. There were other great suggestions of how to do this earlier in the thread.

 

Good luck, and keep us posted with your progress.

[4EverMaAT 10]

I suggest you begin automating as much of the task of your trading strategy as possible. Or adopt a separate automated strategy that you can observe personally exactly how it works over and over. By seeing clear repetitions of your strategy working consistently, this will build your confidence to follow your trading plan manually over and over.

 

I am comfortable with drawdown after seeing it over and over again. It is a part of winning. Trading the same strategy consistently, your risk will actually decrease as your equity increases.

[zdo 20]

Hi all: I'm relatively new only having been trading for about 8 months. I learned a price action method for day trading the e-minis a few weeks ago. The problem is when I'm using paper money, I do great and make great decisions on entries and exits. When I switch to real money, it all goes down the tubes and I generally lose money.

 

How do you overcome this mental obstacle? I know what I have to do and do it well when it doesn't count. When it counts I think I'm so fearful of further losses in my account that I don't make the same sound decisions as I do when its just paper money. I think I have psyched myself out.

 

Another problem I'm having is if I have a losing trade, I am frequently too anxious to get back in with another trade to get the poor trade "behind me" that I don't have the discipline to wait for another good set up, even though it may be hours away.

 

Thanks!

 

Clearwater

 

Disclosure: David, the OP, is probably long gone now so this post is targeted to those few who are in quest of thriving at pareto of pareto levels.

If you check my posts re: sim’n, you’ll find me to be one of the foremost sim-bashers on the planet. Sim-bashers are in the minority… that right there should tell you something… ie 'normals' can ignore

 

Sim’n is the epitome of under training. Period.

Undertraining usually leads to as much ‘injury’, pain, and diminution of performance as does overtraining.

So here’s some advice. Sim has its place – but you should never revert to sim because of ‘performance’ issues again … reframe your game… play for real to start with ...

 

No matter how unambiguous your ‘rules’ are, the markets always has ways to make them seem iffy and the markets always have a way of belying the odds of your edge

:haha:… and guess when the odds of the markets doing those things are ???

For the first few ‘epochs’ in a trader’s development, the odds are always with the first few trades after he goes live :crap:

… it seems perversely diabolic … until one day you realize how you’re actually setting yourself up by not getting fully in touch with your own internal ‘runs’ of perception and adaptation … and you can never really get in touch with them if you sim.

[Predictor 11]

First, take my advise for what you will but I'm as someone who trained in the simulator extensively and went live and have did well (as well or better then I did in the simulator) also trading the eminis.

 

Generally speaking if you're getting different results then it is likely because you've changed some parameters (or the market has changed -- which it does all the time). As an example, if you set soft stops on simulator then you may be missing micro excursions that are taking you out in the real money. Most people become more risk averse when moving to live trading which can make it more difficult to capitalize on opportunity.

 

Also, if on the simulator you trade several contracts but only trade 1 live then another tendency is to adjust the targets to try to make more money -- which doesn't always work.

 

The stuff about blowing out accounts is absolute nonsense and the way that losers talk. It can be more difficult to obtain the results from highly discretionary trading when going live. You may benefit from a more systematic/mixed approach during transition phase.

 

One technique I found that worked well was to trade both sim and live at the same time. This way I can evaluate how I feel about types of trades.

 

What I advise instead of switching back and forth is to start trading live and sim at the same time... this will take some of the pressure off... get into the flow on the sim and then just transition to the live for the best trades..

 

In general, you should keep everything exactly the same in your sim training as it will be in your live trading.

 

 

 

Hi all: I'm relatively new only having been trading for about 8 months. I learned a price action method for day trading the e-minis a few weeks ago. The problem is when I'm using paper money, I do great and make great decisions on entries and exits. When I switch to real money, it all goes down the tubes and I generally lose money.

 

How do you overcome this mental obstacle? I know what I have to do and do it well when it doesn't count. When it counts I think I'm so fearful of further losses in my account that I don't make the same sound decisions as I do when its just paper money. I think I have psyched myself out.

 

Another problem I'm having is if I have a losing trade, I am frequently too anxious to get back in with another trade to get the poor trade "behind me" that I don't have the discipline to wait for another good set up, even though it may be hours away.

 

Thanks!

 

David Skerritt

Clearwater, FL

Edited October 22, 2012 by Predictor

[BlueHorseshoe 10]

Typically the average rotation in the ES is 1.5 - 3.00 pts... Therefore it would make sense to enter potentially after a rotation greater than 3 pts (or more) if your setup shows and then assuming apx 1.5pts rotation you can get a scale to give your trade room but also take the pressure off...

 

Hi Roztom - not used to seeing you about the forum too much these days . . .

 

Please could you expand on this a little?

 

Thanks,

 

BlueHorseshoe

[Logic 10]

After about 18 years of research in the futures and commodities arena I can say that the eMinis are no place for the faint of heart.

 

My group and I have done and are currently doing a lot of research on the volume and range associated with the specifics of price action on individual chart increments for over 800 unique symbols and over 100 stocks.

 

What we have discovered was that, on longer term swing or position charts, symbols level out regarding profitability.

 

The problems are in the "intraday" aspects of trading. In order to safely trade and extract profits from the commodity or futures markets, each day, the specific symbols need ample liquidity and volitility to be consistently profitable. Think about it like hitting a moving target that is 10 feet wide or 2 feet wide. The larger target is easier to hit just like the symbol with the larger volume and volitility is easy in capturing profits.

 

We find; Light Sweet Crude, Unleaded Gas, Silver, Gold and the Euro (not in any particular order) are the safest and most profitability. The second tier smbols are; Natural Gas, Australian Dollar, British Pound, Corn, Cocoa, eMini S&P Midcap 400 (ligher volume), Lean Hogs, Soybeans, Swiss Franc, US Treasury Bonds and Wheat (again, not in any particular order). The Indices; S&P, DOW, NASDAQ and Russell all came in at the bottom 10% of safety and overall profits.

[bakrob99 11]

We find; Light Sweet Crude, Unleaded Gas, Silver, Gold and the Euro (not in any particular order) are the safest ....

 

You have GOT to be kidding right? Ever get into a CL trade and find yourself on the wrong side of a spike against you 50 - 100 ticks? Happens often in CL - NEVER in ES.

 

Or SILVER the most lethal ball buster of them all.

 

Maybe you got them reversed?