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Strategies & Market Trends : Trading For A Living -- Ignore unavailable to you. Want to Upgrade?

To: P.T.Burnem who wrote (387)	6/9/1998 7:07:00 PM
From: Eric P	Read Replies (1) \| Respond to of 1729

<<I doubt one can learn much about trading by paper trading. IMO, the best way to start is to open an account with a deep discount broker and trade in 100 share lots. >> I agree. Paper trading should not be used to 'prove' that a trading method is profitable. There are many factors in trading that adversely affect profitability, and which can only be assessed through 'real' trading. The most important example is the assumption that you will be able to get executed at the desired price. This is not always true. Paper trading should be viewed as the best-case expectations for the system being tested. The actual results will nearly always be less favorable... However, I believe that paper trading DOES have significant value for the daytrader. It enables the trader to weed through many systems to find the ones which show the most promise. Then, only those systems can be tried using actual executions to confirm/validate the value of the system. In short, a system that paper trades poorly WILL lose money in real trading. A system that is very profitable in paper trading MAY be successful in real trading and is worth risking real money to validate. The system that I am using enables me to paper trade dozens of systems simultaneously (Note: I made 5000+ paper trades in 40 different systems last week alone!). This allows me to focus my 'real' trading on only those systems that show potential for profitable trading. I find paper trading to be quite useful in this regard. Good Luck, -Eric