Jun 082011

Sorry for lack of updates, I hurt my hand and it hurts to type.

I’ve always been an advocate of trading on simulator until consistently profitable.  Many people disagree.  I’ve heard people say things such as “anyone can be profitable on sim”, “sim is useless”, etc.

I went back on simulator for 2 months during February & March.  During this time I refined my trading plan and tested many small changes to the way I traded.  Tight stops, loose stops, small targets, big targets, etc.  When I saw my sim results becoming consistent then I was ready to try with real money again.  I had traded real money on and off for most of 2010 and every time I go back to sim for a while I seem to improve.  This time was no exception.  After a month vacation I came back and was profitable on sim and then went for it.

Here is my equity curve from my broker:


I’ve purposely left off the dollar amounts.  The reason is that’s not important.  One can make 1 pt per day or 10, it doesn’t matter.  The only thing that matters is that there is consistent positive growth.

The main point of this post is that if you’re not trading consistently profitably on simulator, then you shouldn’t be trading real money.  Also note that if you’re trading consistently profitably on simulator it doesn’t mean you’ll be able to do so with real money!  Real money brings along all the psychological issues.  This is why many say that sim is worthless but it’s exactly why I think sim is useful!  I feel it’s better to work out issues one at a time and trying to work out stops, targets, entries, etc. with psychological issues at the same time is very difficult.   Psychology is not easy but it’s a lot easier when you have a proven consistent edge.

I think I’ve made the turn.  May was my best month ever.  I’m now increasing my size from 1-2 to 2-4.  So far I’ve had trouble trading 2-4.  I always find reasons to doubt my setup and enter with a half position.  Ahh psychology doesn’t ever go away!  But my daily average is improving each week so I’m making progress.

My current focus:

  • Trading what I see instead of what I think/feel/want.  I often get a bias and have trouble trading against it despite what the market-generated information says.
  • Try to trade with the trend more and fade less
  • Have more confidence in my setups and enter with a full position
  • Cut losers quicker.  I went from 4-6 tick stops to 4 pt stops.  Maybe I can find something in-between those two.  It’s easier to trade size with a tighter stop, but too tight is not good.

Good luck to you in your trading.



  3 Responses to “Sim trading and making the turn”

  1. Hi – Good post. Did I read that right…you went from 4-6 tick stop to a 4 pt stop? Or did you mean 4 tick stop? I assume the latter. Thanks.

  2. I meant 4 points. But I don’t use hard stops now and I will exit my trade if the market is proving me wrong. I am entering in zones of confluence so I have to be more flexible.

    Previously I was entering on CLVNs but I found that sometimes price stops short and I miss it and other times it drops a couple points below it and I stop out. That was frustrating.

  3. glad to see you back, I have been watching you on the leader board as well and I can see your confidence has returned.. along with being consistent.

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