There are many milestones in a person’s career in trading. One of the biggest is going from the simulated markets to the real ones. We’ve got a bunch of trainee traders in Dublin going live this month, so I thought I’d take some time and write down some top tips for them as well as anybody else getting ready to go live in the markets.
Take it easy.
You’ve been killing it in the sim markets, but trading live is different. So take it down a notch. You’ll be all excited to hit the live markets and show what you are made of, but better to just take it easy the first few days or weeks.
Get used to the live markets.
Fills will come through differently. Some faster, some slower. It will take a while to get used to this as well as how the information pulses through to your screens. So take some time to get used to the live markets before you go all gang busters.
Dial down your risk.
With all the changes and emotions of going live, focus on your low risk trades for the first few days or weeks. Focus on hitting singles and stay away from home run situations like Payrolls, FOMC announcements, or other higher risk trades and scenarios. The likelihood is that you won’t hit any homers but strike out. Stay away from high risk scenarios and trades for a few days or few weeks.
Be Prepared for Technical Difficulties.
The awesome things about electronic trading are no mistakes in fills, no miscommunication between traders about who did what at what price, superfast, you don’t have to be in London, Chicago, Frankfurt, Singapore, etc., but computers can crash, servers can fall over and you can be faced with technical difficulties. Make sure you know what to do when technology fails.
You might have been a legend on simulation, but be prepared to go back to basics and trade ones or your base trading unit for a while. Trading the live markets is different from trading sim and better to experience those differences, problems, errors on 1 lots. Don’t worry you won’t miss anything by being on one lots. A trader’s career is long. So let’s get the friction on. Oops, don’t know how that song came into my head. Where was I? Yes, a trader’s career is long, so have patience on your first few days or week’s going live. 1 lots will let you work out the kinks. There will be plenty of time to up size when have proven that you should trade bigger and can handle bigger. But trading one lots ensures you don’t go down early. Which brings me to the final item.
Don’t dig yourself a big fat hole by ignoring all the above advice.
Simulation and live markets are similar but different. Come into the live markets with your defence up so you can avoid early losses. Make sure those early losses are small controlled losses and avoid those kicks in groin that can happen in trading. Don’t be a hole digger. It’s hard to come out once you’ve been digging.
I recommend reading up on the above topics in more detail. Pick up a book and figure out your plan for going live. Because we all know, fail to prepare, prepare to fail.
If you’ve been trading sim, hit your targets, making consistent controlled dough, and you are about to go live, I send you big huge congrats! You are clearly doing something right. Pat yourself on the back, enjoy a moment in the sun, but prepare for the hard work to start all over again. Going live is exciting, but it’s just the beginning. Good luck and fingers crossed for you.