Do You Think Practicing on Trading Simulators Is a Good Use of Time? Check Out the Mess I Made Today

I've written several articles in the past about my relative distaste for e-mini trading simulators. I had a trade running on a simulator account today and proved to myself why I continue to believe that they are good for familiarizing yourself with a trading platform but relatively worthless when learning to trade. Are you a simulator warrior?

I think that just about every brokerage uses trading simulators to entice prospective clients into sampling their trading platform. With that fact in mind, usually traders have spent a good deal of time on trading simulators before they ever come in contact with me in the trading room. What is the real benefit of all this simulating trades? In my opinion, not too much.

In my trading room, I normally trade my DOM up and trade a live account. Because of some changes suggested by my trusted accountant (I really can't stand accountants when they do stuff like this), I am consolidating in number of accounts into single account at a new brokerage. Because it is a small block account, there is quite a bit of paperwork and signatures to be collected during the move; so I have been trading in a simulated account in the trading room. I had a bad experience and it reminded me why simulators don't provide the most realistic trading environment in which to participate.

It's important to realize that I was trying to trade the simulated account exactly the way I would trade my normal live account. I entered a trade that immediately began to work against me and instead of exiting the trade as I normally would, I thought I would give the trade a little time to develop. That was mistake 1.

When I entered the trade the market was flat, but fortunately I was able to spot the point when the market would break down and take a trade in the opposite direction. That was mistake 2. Of course, it was only a simulator trade; but like I said, I was trying to trade the simulator exactly the same way as I trade my live accounts. After I entered the trade the market moved to the downside and then set up for what I thought was a much larger move down. I did nothing. That was mistake 3. As the market moved against me, I was transformed from a professional trader into a blithering trading hack. I moved my stops; I never move my stops when trading a live account. I doubled down twice; I never double down when getting smeared in a trade on my live account. Those were mistakes 4, 5, and 6. Then I got distracted talking to somebody who stopped by my office and by the time I had finished I had lost $3500 of simulated money. No big deal, it's just the simulator. That is a problem.

And therein lies the rub. Because the trade had no meaning, despite my best efforts to simulate real trading conditions, my entire technique and 30 years of experience wilted under the lack of pressure. Yes you read that right; when nothing is on the line the lessons you learn seem to be superficial and seldom long lasting. On the other hand, when a mistake costs you a couple hundred bucks you tend to remember that mistake and not repeat it.

I was shocked at the relative ease I displayed in abandoning everything I knew about trading on this trade. Even though I was determined to make this fake trading as realistic as possible, my mind treated it as superfluous and I traded as if I'd never been taught the thing about trading. It was also unbelievably embarrassing, I felt like an idiot; so embarrassing that I sent a personal email to everyone in the room apologizing for my deplorable trading exhibition. I just could not get over how quickly my mindset changed when I was on this simulator compared to how sharp my mind stays trading real money. I guess at some subconscious level that is the trade has no meaning it doesn't merit my full attention. I wonder how many people battle this problem?

Would you like to start earning 300% every week? So would I... yet you see this type of hype on many sites these days. I don't promise astronomical returns, but 25 years of Wall Street trading experience has helped churn out solid e-mini traders for 5 years.

Simple Three Step Bollinger Band Strategy That Makes Money

Top professional traders all over the world use this system to trade. It works on any time frame but produces better results on the longer time frames such as daily, weekly and monthly. If used properly it can help you make money.

The first step in the system is identifying one of three specific candlestick patterns. There are over 80 Japanese candlestick patterns however, we are only interested in the strongest patterns. The strong patterns we are looking for are dark cloud cover, bearish engulfing patterns, bullish engulfing patterns and piercing lines. Each of these patterns need two candlesticks to form completely. The second candlestick is the most important and it must appear very strong.

The first thing we need is a strong candlestick pattern. A order should not be placed unless a strong candle stick pattern has formed.

The second step is the candlestick pattern must have a strong Bollinger band break out of the upper or lower bands. The first and second candle must break out of the upper or lower band strongly. If the rules are not met the trade set up should be ignored.

So the second thing we need is a very strong upper or lower Bollinger band breakout.

Rule one and two show a sign which indicates that the price wants to change. Either to collapse or advance. It only tells us that either the buyers (bulls) or the sellers (bears) are getting tired, giving up, or switching sides.

The rules also requires that the strong candle stick pattern should form were neither the bulls or the bears do not have full control over the price. This means one of the parties have become exhausted in the struggle to control the price movement.

So the third thing we need is a market showing signs of exhaustion where neither bulls or bears have full control over the price action.

If you do not have all three of these conditions it is too risky to place an order.

Using this Bollinger band system you can expect to trade five times in one month. You can set your take profit order up to ten times your stop-loss order. Your stop-loss order is best set at the previous candles high or low price.

I recommend that you practice in a demo account first. No strategy is one hundred percent right all the time. We are traders not fortune tellers. However, with proper risk management, and a solid exit plan it is possible to become consistently profitable trading currencies.

You are welcome to join our blog and community of experienced professional traders who love to mentor novice traders absolutely free of charge.

Easy Tips To Improve Your Stock Trading Profitability

As a trader you need to understand why it is that you enter a particular position, what is your own specific reason for position entry, the answer can't be "It looks like it's going up". You can't put down money based on a gut feeling; you have to be motivated by a technical reason found in the chart that you are observing. Another factor that will influence your trading is volume. The average daily volume of a stock that you choose to trade should be at minimum 1M shares. Be very cautious when risking your equity, make sure you have spent sufficient time paper trading, otherwise you will pay a lot of money in market tuition... and that can be quite costly.

Something else that will have to be considered is your personal workstation. Keep your work area clean, and uncluttered. A messy desktop will not allow you to think clearly, and will prove to be distracting. You will need a good monitor setup (2-3 monitors minimum) so that you have ample real estate to view charts, level 2, etc. You will also require high-speed Internet connection and a good direct access broker. This is a serious profession based on mathematics and market psychology, so act professional. If you trade with a budget day trading casino mentality, you will quickly gamble away your entire account.

A Few Words About Charts

It took me a few months of experimenting to find my personal g-spot for my own personal chart setup. I'm going to offer up some tips on how you can best manage your own charting.

1. Keep it simple, and uncluttered. Have only the essential information displayed because you will spend a lot of time just waiting for a healthy setup to present itself. If you have a complex window to look at with a lot of flashing colours and numbers, you will only get eyestrain.


2. To reiterate on the first point, don't have too many technical indicators on your charts, especially indicators that conflict signals.


3. Have at least one broad market chart and one sector chart, are they making new highs today compared to yesterday? It is important to gauge the market relative to the previous trading day's range.


4. Have a time and sales window for your stock, is there a buy or sell pressure?

When reading your Level 2 window use it primarily for order routing only. You can't always base a trading decision on what information you see there, because there is a lot of bluffing and intentional manipulation that happens in Level 2. You need to focus on the big picture of the market first and foremost, is it a red or green day? Is it a volatile day or is it very choppy with deadly whipsaw like activity? After you have performed this initial diagnosis, then you can use the individual chart patterns to identify a profitable entry and exit point. A common beginner mistake is just jumping in and out whenever and where ever-an entry and exit point must be determined BEFORE you place the trade.