tech

Make a profit in simulation, lose in real disk, how to break this curse?

Published: Jun 18, 2024
Updated: Jun 18, 2024

Many people say, "I can make money with simulations, but as soon as I start trading with real money, I lose." Where does the problem lie? Most people think it's their mentality. Real trading involves real money, which makes them nervous, while simulations are fake, and they can maintain a calm mindset.

In fact, if they can make money with simulations, there are only three ways:

1. Profiting from the short-term rhythm of the market trend

When they first start simulating, they happen to encounter a market trend, or they make random and chaotic trades that just happen to match the current market rhythm. After two months, they find that their account is profitable, thinking they have the ability to make money, their confidence soars, and they feel pleasantly surprised. However, even if they can make a profit in half a year of simulation, it doesn't prove anything. Testing whether you can make a profit is a long-term process, which requires crossing different market trend adjustment cycles. Short-term profits have an element of coincidence.

Real trading is different. Real trading is long-term or even permanent, crossing many cycles and experiencing various complex market trends. Without experiencing a cycle, it is not enough to prove anything, let alone just a few short months.

2. Not setting a stop loss and easily making a profit after being trapped

In simulations, if they are trapped, they don't set a stop loss and never consider setting one. Naturally, there is no pressure in their hearts. If they are trapped, they don't watch the market much. After a while, when they look again, they find that they have made it back, easily made it back, made a little profit, and then took profit, making a profit. After several times in a row, their account is growing, indicating that they can make a profit in simulations.

Most of the market is a shock trend or a shock-style small trend. The market rises and falls, so if you simulate without any pressure, not setting a stop loss, naturally, you can easily make it back and take profit to make a profit within a period of time.

This ability to make a profit does not prove anything. It is the inevitable result of not setting a stop loss and not encountering a one-sided market in a certain period. But over time, you will inevitably encounter a one-sided market or even an extreme market. Then your simulation account will suffer huge losses, and no small profit can offset such a huge loss. In real trading, many people usually make small profits and do not often suffer huge losses. They can make a profit and their account is profitable, but over time, when they encounter a one-sided or extreme market, not setting a stop loss will lead to huge losses and a margin call, and it's all over in an instant.Thirdly, if the simulated account incurs a loss, switch to a new simulated account.

If the simulated account incurs a loss and no matter how hard you try, you can't make up for the loss, you may feel quite discouraged. Seeing the account that has already lost money, you may feel that it is quite difficult to make it back, so you simply give up on the losing simulated account and start another one from scratch. This way, you feel more confident. If you find that you continue to lose money and can't make it back, then switch to another account.

The fact that the previous simulated accounts all incurred losses indicates that your trading skills are relatively poor and your basic skills are too weak. A person's trading skills cannot be improved rapidly; it requires a long process. Therefore, if the last account shows a profit, it is likely that you happened to catch a screenshot of the market trend and made a profit by chance, which cannot prove that you can make a profit in simulation.

Fourthly, normal elimination.

People who start trading will generally first do simulated trading to explore the depth of the market. Under the three types of profitable situations mentioned above, they find that they can make a profit in simulation, so they blindly go to real trading, but suffer losses in real trading. Those who first do simulation and find that they keep losing in simulation, thus losing confidence, find that the water here is deep and making money is difficult, and simply do not step into the financial market.

As a result, the people who remain in the market are those who "make money in simulation but lose money in real trading."

Summary

If your simulated profits are all from the above methods or other incorrect methods, then please face yourself honestly, admit that your trading skills are very poor, and your basic skills are very weak. It's not just a problem of mentality, but more importantly, it's a problem with your trading skills. Your trading foundation is very poor, and you don't have the basic skills of trading. Don't easily attribute your losses to mentality.

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