Why am I very good at simulator trading but not at real trading?
The phenomenon of being very good at a trading simulator but having difficulties in real trading is quite common and is mainly due to a combination of emotional and psychological factors. Here I explain the most common reasons:
1. Emotional difference: In the simulator, you don't have the same level of stress because you're not risking real money. This allows you to make more objective decisions and follow your trading plan without hesitation. However, when trading in real life, the pressure of winning or losing money triggers emotions like fear and greed, which can interfere with your judgment and lead you to exit early, enter late, or skip your trading plan.
2. Confidence and discipline: In a simulated environment, it is easier to maintain discipline because losses do not impact your pocketbook. In reality, after a series of losing trades, it is common for traders to lose confidence and deviate from their trading plan or adjust strategies for no objective reason.
3. Risk psychology: In the simulator, you can take risks without the same fear of the consequences. In real trading, the perception of risk is higher and often leads you to make decisions that you would not make in the simulator, such as exiting a trade for fear that the market will move against you.
4. Pressure for results: When you trade with real money, you are more focused on the result of each trade rather than on the consistency of your long-term strategy. This pressure to make quick profits can cause you to make hasty decisions, while in the simulator you can be more relaxed and follow the right strategy, without focusing too much on short-term results.
5. Cognitive biases: In real trading, biases such as loss aversion (fear of losing) and confirmation bias (seeking information that confirms your ideas) are much more pronounced and can influence your behavior. In a simulator, these biases are often less significant because the impact of decisions does not feel as real.
6. Emotional risk management: In real trading, risk management becomes more complex, as each trade represents not only an opportunity to win but also a real risk of losing money. This emotional impact can cause you to not follow risk management rules strictly, which affects your performance.
To improve the transition from simulated to real trading, consider the following:
Start with small amounts: Trade with a fraction of your capital so that the emotional impact is less, and increase the size as you gain confidence.
Work on your psychology: Consider practicing stress management techniques, such as deep breathing or meditation, to help you stay calm during your trading.
Focus on the process: Try to trade like a simulator, focusing on following your trading plan and not on the outcome of each individual trade.
Post-trade review: Analyze your trades and how you felt during each one. Understanding how your emotions influence your trading is crucial to making adjustments.
Success in real trading depends not only on your technical knowledge and skills, but on your ability to control your emotions and stick to your plan under pressure.
