Break the Vicious Cycle: SIM Trading vs. Live Trading

For those new to trading, aligning expectations based on the SIM trading environment versus live trading often poses a significant challenge.

For many traders, the point of SIM trading should be to become mechanically-sound. Are you going to learn what it feels like to have a position on that’s going against you in a simulator? Well, you’ll get a taste of what that feels like, but in all honesty, it’s just that — a taste. To be perfectly honest, it’s nothing like what you feel when you’re trading live capital.

So, the question becomes: are your expectations regarding your SIM trading success going to match up with those you have while live trading?

It isn’t that likely. For example: maybe you’re hitting an 80% win ratio — when you’re trading live, that ratio may be closer to 50%…or even lower. In order to protect yourself, be sure to take these kinds of discrepancies into account when you’re SIM trading.

Another concern that arises in SIM trading is whether or not you’ll be able to manage risk as well in the simulator as you do while live trading. The short answer is probably not. Pay attention to that change and what it feels like; pay attention to what you’re learning on the simulator, and if you do, when you do inevitably go live, it will give you a better chance to start building that foundation in order to be successful in your trading.

The consequences of having unrealistic expectations are severe, especially in this kind of scenario. Unrealistic expectations often lead to bad decision-making; bad decision-making leads to bad trades; and bad trades lead to losing money (which everyone wants to avoid!).

Losing money then leads to frustration, creating a vicious cycle. The only way to break the cycle is to have realistic expectations and goals in mind for your career. Basically, your head needs to be in the game — not in the gutter or in the clouds. If your expectations are out of line, get them in line now. It’s crucial — you don’t want to be stuck in that cycle.

NinjaTrader provides free unlimited access to a trade simulator along with free backtesting, daily training webinars and more. Get Started with NinjaTrader.