The beauty of a written plan is that it is easy to discern whether you followed your plan or didn’t follow your plan. Once you establish that you are following your plan to the letter it is easy to determine whether the system works or doesn’t. If you have only a mental plan that you modify as you go then you never know if the problem is the plan or the trader. If you feel that there are certain instances that may cause you to alter your plan you should be able to put them in writing as part of your plan. Then in the heat of battle, so to speak, you will know you planned for such an instance and know exactly what to do.
Maybe T = Testing. Test your strategy before you go live. Use a demo platform in real time to see if you have the discipline to follow your plan. If you feel you have to have some skin in the game to teach you the hard lessons then take $500 in $20 bills and put them in an stack on your desk. Put on a demo trade. If you followed your plan then put a bill in your pocket. If you didn't follow your plan then set a bill on fire or flush it down the toilet or give it to a homeless person or someone you don't like. At the end of the day replace all the bills you destroyed or gave away. Don't be concerned if the trade made money or not, reward or punish yourself depending if you followed your plan or not. Once you have $500 in your pocket you can look and see if the system made money. I know this sounds silly but the method works and can save you money in the long run. For what ever reason destroying or giving away physical money is more painful than losing money out of your account. It will force you to follow your system. If the system didn't make money then you will know that the problem is the system not the trader. The other thing is you learn a little about yourself. Will you cheat on the methodology? Will you actually destroy or giveaway the physical cash? Will you come up with good excuses for not following the plan so that you won't have to lose a real $20? That is up to you. This exercise and trading a live account will teach you about yourself. This exercise will only cost you a couple hundred if that.
Don't know about the giving away money versus losing money out of your account deaddog, try losing 17K sterling in one morning and you may think different These discussions are good, especially if someone reading has the mindset to look beyond the text and see what is actually happening. Some of my thoughts in no order. A plan will be as complicated or as simple as I make it. I will only learn anything of real value by real experiences. The least amount of things I have to think about the better. Trading will involve losing money, so I must not lose too much on each trade I put on, so that when a good opportunity does present itself I will have enough money to trade as I must, that is if I want to make any money worth talking about. I must not be thinking like everyone else, for it stands to reason that if it so easy to make money trading with a text book method then everyone would be millionaires which of course the opposite is true. I must wake up and start doing what I need to do, not what I think I must do. When I make some money I must learn how to keep it. J_S
If one can't develop and trade a consistently-profitable trading plan in sim, it's a safe bet he won't be able to do it in real time with real money. If he does develop and trade a consistently-profitable trading plan in sim but his real-time, real-money trading results are not what was expected, then the trader either (a) doesn't trust his own plan (a common occurrence) or (b) he's afraid to trade it. (a) can be fixed. (b) can't, at least not by continuing to trade; continuing to trade only makes the problem worse as the trader is now (c) afraid to be wrong and (d) afraid to lose money, so he is virtually guaranteed to do both. Nail down a consistently-profitable trading plan in sim. Or go to Vegas. At least there you get free drinks.
Was what you learned by losing 17K in one morning worth the cost? Could you have learned the same lesson by burning $20 bills or the sterling equivalent?
Simple is better. A simple checklist of the things you want to see before you initiate a trade and an exit strategy. Fighter pilots train on simulators. If you are going to crash and burn it is better to do it on a demo account. Preserve your trading capital until you are ready to fly. Right. If you have a plan you don't need to think because you already know how you will react to what the market does. Focus on the process not on the outcome. Maybe it is that easy but no one believes it is. What is hard is overcoming your emotions. A trading plan is a good way to start that process. And what would that be? Focus on the process. J_S[/QUOTE]
If someone can use sim trading to become profitable, then good luck to them. The loss does not bother me now, it was in 2007 and I had already made the money, but like I have said previously, making money is no good unless you learn how to hold on to it. I was told by a certain person some years ago, that has the required experience, that some will not start to make real money until they have lost big so many times, and I laughed at him at the time. He was of course correct, and looking back I was indeed foolish to not listen and fully understand what he was telling me. Everyone is different and have their own circumstances, so each person will have to work out what is best for that person. Is there a need to waste your money on systems or courses, not at all, just search the internet for relevant information, filter out the crap, and start doing what you need to do. Without experience a person may find it very hard to succeed, then again, one may be just one the lucky few that are born with the ability to run. J_S
How do you know what is crap and what isn't? What is it you need to do? While attempting to filter out the crap you have to avoid what behavioural finance researchers call confirmation bias. This is the tendency to seek out information to confirm your beliefs and ignore or underweight anything that runs contrary to what you believe to be true. For instance, for what ever reason, you believe that you cannot learn to trade using a simulator. You believe that “you will not start to make real money until you have lost big”. I don’t agree with either of those statements. Because I don’t, I forward test any strategy I develop on a simulator in real time before I trade it live and I have never blown up an account. Confirmation bias on my part. As you filter out the crap, make sure you are balanced in how you do it. What do you need to do? Challenge your own beliefs about trading, take the time to try and prove them wrong. Of course this advice is from an anonymous poster on an internet forum. What are your beliefs about that.
I believe that each person can read what is posted and make up their own mind. If one is clever enough, they can read between the lines and might just pick up something that will help them stop wasting time and start learning what they need to know. It is just a matter of using common sense really J_S