I’m committed to paper trading for a time before wading into investments of real money. And when I do move into real investments, I’ll start with small sums. But because my paper trades don’t impact the market, I can’t help but feel that operating in the market is going to be a very different experience and a very painful wake up call. And that in reality, the dealers will simply move the market to shake me (and others) out no matter what I do.
Thoughts? I’d be grateful to hear from seasoned traders on what they experienced when they moved from paper trading into… the desert of the real.
Ha, ha. Even a few millions dollars account wouldn’t impact the trillion money market. So forget about moving the market and the dealers.
Having said that, the difference in trading live accounts is how it affects your emotions when you have your own money on the line. Many newbies cannot handle that.
Its right to be concerned that brokers may move their quoted prices which might cause you to be stopped out of a good position. They do this by widening the spread between their bid price and their ask price, i.e. they prices they quote to their clients at which you can either sell or buy. Obviously the ask (buying) price is higher - that’s how they make a profit. Since ask prices are usually not used to draw charts the increase in spread does not show itself on a chart.
They’re not chasing your position specifically but if you’re in a position with multiple other clients and your stop is set where many of them have stop orders, this enlarges the risk the broker is facing. So they widen their stops, increasing their profit margin and reducing their potential loss and capital exposure.
So wider stops are better, which suggests longer time-frames (and probably therefore smaller positions). But always use a stop - the risk of it being triggered is less than the risk of not having one.
It can be frustrating for you, as you would only find out through live practice.Firstly spot trading you don’t actually “own” the asset but betting on the outcome via the broker.Do cumulative retail traders effect or move the market? During the period s of high volitily I wouldn’t have thought so.Though after the “storm” I’m not sure .Good question.I have heard the term “retail money” used to explain certain shifts of the market s
Many thanks to you as well for taking the time to chime in!
.
Good to know about the specificity of stop hunting, and duly noted that if I’m sitting in a position with many others that adds up, it stands to reason we’re sitting ducks that in the aggregate may comprise a threat/juicy target…
And will definitely ensure I’m fluent in assessing those spreads!!
Spreads are a real threat. They can widen by 10 or more times from normal when the market is just closing or opening, or when news is expected or when unexpected news has just emerged. The best way to assess how wide they can go is to sit and watch live - watch the quotes, not the chart. Especially scary on a Sunday night (UK time) when the Asian markets are trading alone and are only just opening.
Noted, and will do, thanks!! I always check out the Average True Range over several periods and historic relevant events (for whatever they might be worth) in assessing the stop and the take profit. But that doesn’t show the spreads or beat your prescription for getting a feel for the market!
This is what sparked the question for me, though I’d been thinking about it for a while:
I thought the most plausible explanation was that the market movers simply shook the retailers out of their stops, collected their dough and then kept on moving…
