• Australian (ASX) Stock Market Forum

Ever had one of those days

Discussion in 'Beginner's Lounge' started by aBadTrader, Sep 27, 2016.

  1. aBadTrader

    aBadTrader Well-Known Member

    Posts:
    55
    Likes Received:
    0
    Joined:
    Aug 2, 2014
    where you cannot lose, and then you realise it's DEMO money and it shatters your dreams lol
     
  2. cynic

    cynic Well-Known Member

    Posts:
    2,122
    Likes Received:
    1
    Joined:
    Feb 25, 2011
    Demo dreams usually translate into live nightmares when aspiring traders make the mistake of taking them seriously.
     
  3. aBadTrader

    aBadTrader Well-Known Member

    Posts:
    55
    Likes Received:
    0
    Joined:
    Aug 2, 2014
    Yeah I can see that coming. The only reason I think it's easier to trade demo is because I am not worried to lose it. Taking less stupid impulse entries and waiting for targets to hit

    At the very least I can say I am following a theory, only risking 1% total with a 2% day stop.
     
  4. CanOz

    CanOz Every day above ground is a stellar day!

    Posts:
    10,258
    Likes Received:
    20
    Joined:
    Jul 11, 2006
    One thing is for sure though, if you can't make money on a demo, you're not going to make money trading live.:2twocents
     
  5. aBadTrader

    aBadTrader Well-Known Member

    Posts:
    55
    Likes Received:
    0
    Joined:
    Aug 2, 2014

    Hahaha! You got that right! on my 11th consecutive win today I guess I am pretty proud of myself
     
  6. Gringotts Bank

    Gringotts Bank Well-Known Member

    Posts:
    4,796
    Likes Received:
    7
    Joined:
    Jun 30, 2007
    And a nice little equation by um... can't think of his name now. Goes like this, and assumes consistent sizing and methodology in a discretionary trader:

    (demo profits) - (real trading profits) = x factor

    You want x to be small because it represents the impact of your psychology under pressure.
     
  7. Gringotts Bank

    Gringotts Bank Well-Known Member

    Posts:
    4,796
    Likes Received:
    7
    Joined:
    Jun 30, 2007
    If I was you, I'd be capitalizing on this 'run' and putting some real money down right now. You're seeing things well at the moment (obviously), and this won't always be the case. Take opportunities as they arise.
     
  8. aBadTrader

    aBadTrader Well-Known Member

    Posts:
    55
    Likes Received:
    0
    Joined:
    Aug 2, 2014
    To be perfectly honest, I know 60% of the reason why I suck as a trader is because I am overly emotional, and won't manage risk properly. All of a sudden in Demo I am managing risk, setting day stops and only trading what I truly believe is a winner, regardless of whether or not I am wrong in the end.

    Heh, I must have lost a few thousand on FOMO alone.
     
  9. Gringotts Bank

    Gringotts Bank Well-Known Member

    Posts:
    4,796
    Likes Received:
    7
    Joined:
    Jun 30, 2007
    Right, that's the same reason I'm no good at discretionary trading. So you either work on that or change to systems trading. Currently I trade systems but most of my grunt work is on the emotions. One day I can move across to discretionary trading, maybe.
     
  10. cynic

    cynic Well-Known Member

    Posts:
    2,122
    Likes Received:
    1
    Joined:
    Feb 25, 2011
    A friend of mine recently automated a strategy, which he then tested concurrently, on both the live and papertrade accounts, on his trading platform.

    Would you care to hazard a guess about the size of the x factor experienced on that occasion?
     
  11. Gringotts Bank

    Gringotts Bank Well-Known Member

    Posts:
    4,796
    Likes Received:
    7
    Joined:
    Jun 30, 2007
    What you're describing is a bit different because it's a system, so discretionary x factor should be zero. But I'm interested to know.

    My guess is that demo accounts fill you 'favourably' whenever possible, resulting is much bigger profits than is truly possible.
     
  12. Habakkuk

    Habakkuk Well-Known Member

    Posts:
    92
    Likes Received:
    1
    Joined:
    Sep 26, 2014

    I don't think cynic is referring to demo accounts and a possible conspiracy by the CFD provider.
    He is probably saying that even an automatic system involves emotions and that these emotions work against the trader.

    The aim of trading psychology is to minimize that x-factor.
     
  13. Gringotts Bank

    Gringotts Bank Well-Known Member

    Posts:
    4,796
    Likes Received:
    7
    Joined:
    Jun 30, 2007
    If you're running both simultaneously, you're unlikely to intervene. So I'm assuming the trader in question just let both systems run freely. So if there's a difference, where's it going to come from?
     
  14. Lone Wolf

    Lone Wolf Well-Known Member

    Posts:
    359
    Likes Received:
    10
    Joined:
    Dec 4, 2008
    I’d also be interested to hear the reason. It does raise an important point that you need to be sure you are testing on the same data as you intend to trade.

    Some demo accounts have data discrepancies compared to live accounts. I believe I heard someone complain that IB’s sim mode isn’t identical to the real market. Other times, the demo account has a fixed spread, whereas the real market will vary in volatility.

    I had a case where I was running an intraday auto trade strategy. During the session I’d be entered into a trade, all good. But after the trade, if I reload the chart with historical data”¦ no trade. So my real time trading was producing signals that didn’t show up in a backtest over the same period.

    It was because bar start/close positions were different in historical compared to live, with Interactive Brokers. Historical data was based on the brokers clock. Real time data was based on my computer clock. Since my strategy included code that used the bar close eg. “if bar x closes lower than the low of bar y”, it meant that changes in bar open/close times changed the system signals. So be careful using bar close in your code for intraday, it’s not very robust.
     
  15. Habakkuk

    Habakkuk Well-Known Member

    Posts:
    92
    Likes Received:
    1
    Joined:
    Sep 26, 2014
    Maybe I've misunderstood cynic. It's not clear to me what testing a 'live' account is versus 'paper' trading. Does he mean testing without money? Because emotions only 'happen' when actual money is involved.
    And what is papertrading in the context of a platform? Maybe he is referring to the different data between live and demo accounts. I may be naive but I can't see the point in providing 'favorable' data in a demo account. Wouldn't you find out pretty soon and close the account?

    I'm sure cynic will explain.
     
  16. aBadTrader

    aBadTrader Well-Known Member

    Posts:
    55
    Likes Received:
    0
    Joined:
    Aug 2, 2014
    I should mention that I'm trading Forex with Pepperstone and only hitting half lots so getting filled is rather easy. Hit my first two losers after I created the thread haha. Getting them back in a trade now.
     
  17. cynic

    cynic Well-Known Member

    Posts:
    2,122
    Likes Received:
    1
    Joined:
    Feb 25, 2011
    When performing the autopsy, my friend noticed that the majority of profitable trades on the papertrade account weren't replicated on the live account due to not getting a fill on either the open or the profit target, resulting in a dismal underperformance.

    I suspect the cause of the missing fills to be a result of fleeting opportunities that require faster than practicable order placement.

    There may be other potential causes, but I don't want to become embroiled in a HFT/market spoofing discussion at this time.

    Please note that, the instrument his strategy was centred upon, was an exchange traded futures contract over one of the major international indices.

    OTC products open a much larger can of worms due to the combination of market opaquity and interest conflicted counterparties.

    Whilst I agree that personal psychology can be a major factor in a trader's performance, there is often a lot more to demo versus live performance differentials than psychology alone.
     
  18. cynic

    cynic Well-Known Member

    Posts:
    2,122
    Likes Received:
    1
    Joined:
    Feb 25, 2011
    Apparently the platform/broker refer to the simulation/demo account as a papertrading account (as distinct from the live account where real money is at stake). So when my friend tells me about his paper trading account I understand it to be, more or less, synonymous with simulation or demo accounts.
     
  19. Gringotts Bank

    Gringotts Bank Well-Known Member

    Posts:
    4,796
    Likes Received:
    7
    Joined:
    Jun 30, 2007
    Yeh slippage is never really known until you start trading. The shorter the time frame and the smaller the targets/stops, the more likely a good system will fall apart under real conditions. Can be devastating to put hours (or decades) into something only to find out it won't really deliver.
     
  20. Gringotts Bank

    Gringotts Bank Well-Known Member

    Posts:
    4,796
    Likes Received:
    7
    Joined:
    Jun 30, 2007
    My latest DAX system - 5 contracts. It's optimized on 5 minute bars, looks great, but there's a long distance between this and profitable. It might not even be profitable at all in real life.

    x.png
     
Loading...

Share This Page