Topic: Virtual trading before actual one - pros and cons - page 5. (Read 797 times)

Trading of crypto, stocks, and forex are being done virtually. To avoid confusion here, I assume what you meant about "virtual trading" is practice trading with a digital currency with no value. And real life trading means, engaging into a trading platform with digital currency that has an actual value.
Now, the purpose of practice trading is to let the newbie trader understand the functions, chart, and market movements. But, when you're trading in an actual trading platform, things would obviously be different because there is already a pressure, doubts, and fear that plays along your emotion that will challenge your risk tolerance.

I've said this a thousand times that nothing would ever teach us a good strategy in trading but our own experience.

That's just a matter of mindset/behavior. If it takes $30 for them to take something seriously, then that's on them, but why would you not test out your strategies in a risk-free playing field before experimenting with anything tangible?

If you can't test your 'emotional intelligence' with trades, then so be it: test your procedures instead.

I generally give a contrary advise to people. Virtual trading doesn't makes sense because trading actually isn't merely practicing your strategy but also practicing your emotional intelligence and patience along with it. Which you would never be able to do in virtual trading account because you have no emotion attached with that money. Instead I recommend people going in with small amount in real account. For example say $30-50. Generally you won't see any restriction on lot size in cryptocurrency so 30-50USD of amount is something you can learn trading with. Just adjust your portfolio accordingly. You will even get taste of real trading without burning yourself too much.

This makes some sense, but even without an incentive to do more research, virtual trading can be a safe measure of determining your aptitude if you do expend the same amount of effort trading as you would with a real balance.

Besides, you don't want to fall prey to your own cognitive biases and start gambling without knowing the odds.

There's the idea of "scared money" in poker. If you're playing with money that you're scared of losing, then you have already become attached to the bankroll that you're wagering. When you are making bets or trades, you are prepared for the worst-case scenario, otherwise you would not (or, for most people, should not) have performed the action.

That's one reason why some people like to hide their balance, so their behaviors are not influenced by any psychological factors during volatile swings.

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A lot of people get the whole "emotionless trading" schtick completely wrong: you aren't emotionless. Instead, you're risk-averse and seeking to maximize your expected gains. This means deducing conclusions through reliable processes, and not falling for any fallacious thinking that can negatively skew one's perspective.

I just skipped straight to using small amounts of funds.

I dumped ~1% of my portfolio at the time and started trading with 1-5% (~$1-5) amounts of that 1% to test how well I could do for profit, but I was also following signals, at the same time on a different account so I could keep track of sentiment and still make some sort of profit. I think I'd just have got bored of a demo account and 30 cents profit on a dollar isn't too bad of a win and the negative of that is a much nicer loss too.

Why used a word virtual trading, just used its demo account.

The reason because you doesn't care about the money and there is no psychology, emotion and other things by using demo account money. Successful or not you will not really care at all since that's just a demo account money. Ratter than using a demo account, better just make some TA on Trading View and always safe your TA work. Make some list and data for each month, how manny successfully analysis you make.

I think practice and observation your analysis with around 3-6 month already enough to you to start the trade with real money, try it first the smallest fund.

I see a lot of advice where people suggest each other to practice on websites where they can trade with virtual money. To be fair, I am in this list too among them but at the same time no one warns such people that it was it's pros and cons, more likely cons are outsiders while giving advices.

Pros: You trade with virtual money where your actions can't raise/damage your real budget, it looks like you spend money like nothing. This gives us possibility to test our skills and abilities in trading and help us further why we make mistakes and what we need to fix while considering the fact that the reason why I profit/lose is because you lose/profit.

Yeah, it sounds good but sometimes when we move on real life trading, things go wrong. We are always warned to leave our emotions outside while we are trading that includes: Not to panic sell, hold when there are harsh moments, etc. But we forget to mention another main emotion that we face in this situation: We trade with our money where we are responsible to results and these results may have huge impact on our life. Inside, in our subconscious, we worry about the results because we trade with our, real money.

To my mind that's one of the main reason why people usually start well with virtual trading and end up badly in real life trading and somehow this is one of the most skipped problem in overall.