Simulated Vs. Live Trading

Simulated Vs. Live Trading

You have been using our Infinity AT platform in the simulated trading mode for the past couple of weeks which has hopefully given you a good idea of all of the great features our platform has to offer as well as how well you might expect to do in real live trading. In order to replicate real world trading as best as possible treat your simulated trades like they were in your real account: use realistic stops, trade the same number of contracts you will be trading in your real account, use the same strategies you plan on using in the real market, etc. Of course you can use the a simulator to experiment with, but once your experimenting is out of the way and you have your strategy down, stick to it over an extended period of time to see how it works.


While this practice is essential, the major difference is that you do not have the true psychological component of trading taking effect, which is the fear and greed associated with trading when you are risking real money. Many traders tend to gloss over this seemingly unimportant aspect of trading, but after you have your trading methodology down, I recommend you read (and follow) a book on the psychology of trading to get your mental state in order, also. Taking a loss when your stop order is hit doesn’t hurt as bad when it is just play money, but will you be able to place that stop loss order and let it get hit when real money is at stake? Likewise, letting a winning trade run isn’t too hard in simulation mode, but will you have the tendency to get out too early and book a small profit when it is the real deal? Make sure you are psychologically prepared to stick to your strategy and trading plan when your human emotions try to take over.

Once you think you have your trading methodology down and are mentally prepared to trade your hard earned risk capital it makes sense to start out small. Just like a pilot will train on a computer simulator for hours and then take the wheel of a real plane, they still need to solo practice in the air without passengers before they become reliable enough to be trusted with the lives of others. In other words, in the beginning you don’t need to trade as many contracts, as you might eventually do once you are confident with how your real trading has been progressing. When you decide to enter the real world of trading with a live account start out slow as you may find there are some additional emotional obstacles and trading mistakes that you need to get over or make adjustments for.


Beware - Some simulated trading platforms are designed to be easier than real life trading especially when it comes to limit orders, which will give you a false sense of security. For example, these platforms fill your limit orders even if the limit price is hit just once, which is not indicative of what you will experience in real trading. In electronic futures trading, limit orders are filled on a “first come, first served” basis, meaning if there are currently 600 contracts trying to sell at 855.50 and you place an order to sell 5 at 855.50, 600 contracts need to get filled before you start to get filled. So depending on how many contracts trade at each 855.50 tick you may need to see several ticks at that price before your order is filled, in fact 605 contracts have to trade at 855.50 before all 5 of your contracts are filled. Our Infinity AT platform actually waits until the market trades through your limit order, in this case 855.75, before it will report a fill to you therefore, making it harder than real life trading in this regard. We would rather make this filling of your simulated limit orders harder, so you are prepared for the worst case scenario that will occur sometimes in the real trading environment.