Page 10 - Trading #101 Course – PART II TWO: SUCCESSFUL TRADING PIE – www.traderscoach.com

TRADING #101 COURSE – PART II TWO: SUCCESSFUL TRADING PIE – WWW.TRADERSCOACH.COM

Objections to Paper Trading

Getting back to the traders I mentioned earlier who feel paper trading is not beneficial, it
seems valuable now to address the most common objections to a paper-trading
approach. Here are the objections I hear most often:

• Paper trading doesn’t subject you to the same emotions. You know this may
be true to a point, yet it doesn’t seem intelligent as an argument. In medical
school, would it make sense for surgeons to operate on live patients before they
really know what they are doing? I don’t think so. Trading is a life-or-death
situation, your financial life and death, that is. Treat it with the respect it
deserves, and paper trade until you know what you are doing.

• You’ll get addicted to paper trading. Maybe there are people who feel they’ll
be afraid to pull the trigger with real money if they paper trade too long. Here’s
the thing: If you know that your plan says you must have three sets of
consecutive trades (25 trades in each set) that are profitable before you go live
with real money, why be afraid to pull the trigger? If you prove to yourself you can
be profitable, there is no problem. Then if you prove to yourself you can’t be
profitable, you’d better fix the problem.

• Back- testing is the only way to test a system. There are lots of ways to back-
test. Paper trading is one of the ways you can back-test. The eSignal platform
has a great playback feature where you can take data from the day (or week or
month or year) and play it back. You can in a sense paper trade a live market.
Granted, technically it is not running live, but if you play it forward one price bar
at a time, you will feel experience it as if you were trading it live. The value of
testing your system in this way is that you are not only are you testing your
system rules, but you are also testing your psychology and your ability to follow
those rules.

• It’s too much work. Yes, it requires dedication and work to complete three sets
of 25 profitable trades. But then again, anything of real value usually requires
some work. The value acquired from this type of paper trading, produces results.
I’ve seen it time and time again. The question is: Are you under the illusion that
trading profits will be quick and easy? And, if you enjoy the actual process of
your trading, it won’t seem like work since every step of progress will give you
great satisfaction. Remember, if you are doing something you love as your job,
you will never work a day in your life.

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