4 Ways of Thinking That Can Radically Improve The Way You Trade – Principle #4

This blog is the last of a 4 part series.  Let’s do a quick recap:

  1. The first blog presented the virtues of starting from scratch, approaching your trading knowledge base from a position of doubt.
  2. The second blog discussed the mythical idea of the Holy Grail in trading, and how it both doesn’t and does exist depending on what you seek and how you understand it.
  3. The third blog was about seeing risk and opportunity from a big picture perspective, outlining a few ways in which traders can easily miss this simple and obvious rule of thumb.

This last installment aims to finalize and tie-in everything we’ve covered. This is both a mental and action-based tip.

Principle #4 – A Few Minutes of Live Trading Can Trump Years of Simulation

We’re all familiar with the notion that theory can’t hold a candle to real-world practice. The description of an experience can never be as vivid as the experience itself.

When it comes to trading, it doesn’t matter how much you’ve mastered in a simulated environment. It doesn’t matter how much virtual money you’ve made. There may be countless “demo millionaire” traders out there, many of whom are walking encyclopedias of trading strategies and tactics.  BUT if you can’t trade profitably in a real market, then, in a way, you can’t be successful at futures trading. Simple as that.

You Can’t Use a Demo to “Practice” a Market

Many traders are under the misguided impression that demo platforms exist to practice trading the live markets. Nothing can be further from the truth. Demos exist to learn a platform, not to learn a market. Due to this erroneous notion, there may be thousands of “traders” who have spent years practicing and perfecting their trading tactics in a simulated environment, and when most of them have reached a level of confidence to trade a live market, they cannot trade profitably.  They quickly realize that the real thing doesn’t resemble the demo environment at all. And there goes years of time and preparation down the drain in a matter of minutes.

Simulated Trades Are Not In Sync with Real-World Supply and Demand

This pretty much says it all. If demos are not designed fill your orders based on “real” supply and demand, then you can’t accurately test your trades unless you engage in a live market. And until you test your trades in a live market, you won’t be able to assess the real quality of your strategy.

Taking Small Risks Often Might be a Stepping Stone in Learning How to Trade

If you can’t stomach taking losses on emini’s then you might want to try your approach using micro emini contracts. Just be careful to adjust for differences in liquidity. The main point is to trade live once you feel you have a viable strategy, because simulation is not the same as a live trading experience.

If you cannot afford to trade live, even at a micro contract scale, then you shouldn’t trade – it is that simple. But if fear is what is holding you back, then just remember that no matter how many months or years you spend practicing or perfecting your trading approach in a demo environment, a few minutes of live trading can either confirm the viability of your hypothesis or it can tear it down completely, both of which can provide valuable information and feedback.

Good luck in your trading journey! Trade wisely.








Please be aware that the content of this blog is based upon the opinions and research of GFF Brokers and its staff and should not be treated as trade recommendations.  There is a substantial risk of loss in trading futures, options and forex. Past performance is not necessarily indicative of future results.