Paper trading vs. Real trading experiment

you know i keep wondering what would happen if someone did a study of the following. much like a placebo experiment.

both groups are to trade to the best of their ability to make the highest gains possible.

give group A limited virtual credits and tell them that it represents real money. any profits they make above the initial amount they get to keep. this would bring the element of real world money to their thought process.

give group B limited virtual credits and tell them they are just that. no promise of profit sharing mentioned but an emphasis is made so that they do trade to the best of their ability.


in your opinion who will make the highest profits and why?

i think even though group B would not take it as seriously, and for this reason, they will make better gains as the element of fear, greed and general emotions attached to real money are removed enabling them to have a clearer thought process.

Re: Paper trading vs Real trading experiment

"Give group A limited virtual credits"

I think it would be good to have a third group - one that uses their own money to trade. The groups would need to be of a decent size to ensure that a small group doesn't have any extraordinary skills. The 3rd group could be randomly selected from brokerage records of an online trader.

I have no idea who would do better. Long term paper trading seems a waste of time when we can backtest and forward test trading solutions. Although it can be useful to test for coding errors in the trading system.

Steve

Re: Paper trading vs Real trading experiment

There is a lot of difference in having a paper trade or a real one. The difference is the money. If you played monopoly with real money would you play the same game even if you would play at all.I'm sure that there would be a lot different stock picks in this forums competetion if the rules were changed so that entries had to be accompanied by a purchase of $1000 worth of the stock picked.

How about that for the competetion rules Joe?

Re: Paper trading vs Real trading experiment

Joe said while ago, that competition rules could change if he can secure somebody’s help to make it look like more realistic journey.

With start day, but not necessarily compulsory purchase on that day, with multiple entries and exits, with more than one contestant allowed to trade any particular stock.

And contestants would be allowed to exit at any time up to compulsory exit on last day of competition.

But this is time consuming and logistic nightmare especially when you add intra-day entries and exits.