Dan,
In general, I agree with your point about live trading in that there is no substitute for pulling the trigger, dealing with liquidity issues, knowing the real impact of late prints on you analysis, etc. Where I disagree slightly is...
I believe it should be a three step process, not two. I.e., by implication, you are saying first trade small to start, then increase position size as the trader gets better. This assumes that the trader has chosen a strategy that CAN be successful.
I think that it should be a three step process. The first step is paper trading, followed by your two steps. If a trader is a newbie, and hasn't developed a good trading plan, they will lose a significant amount of money just trading small. Commissions and slippage can eat up your account even with small positions.
Just because a trader is successful with paper trading doesn't mean that they will be successful with live trading. But... If a trader has chosen a trading plan that is NOT successful while paper trading, they can't hope to succeed in live trading. I suggest testing each trading plan by paper trading. If successful, follow that with live trading small positions, followed by larger positions.
Regards,
Dan. |
