Practice vs Funded Trading vs Backtesting

Let me differentiate the difference between what I mean by practice and funded trading, as people have different definitions for this.

All trading is REAL for me, whether it is funded or not. If I do not take trading seriously when I make a trade, it is engraining things I do NOT want to engrain and it will come out in my trading.

The ONLY difference between my funded and practice trading is one is funded with actual money and the other not. Everything, and I mean EVERYTHING is the same. This means, I do the practice trading real time, whether it be swing trading or daytrading whatever timeframes.

Keep in mind, practice does not make perfect. Perfect practice makes perfect.

I follow my trading strategy, which is a part of my trading plan.

A question was asked by a reader whether in my $200 accounts whether they are practice or real. Some of the trades I made (entry/exits) were funded trades. Some were not.

BACKTESTING - for me, this is not done real time and these are more drills for me. Often I will go through a lot of data in a very short amount of time, also trading using my trading strategy. For example, I could trade 6 months worth of Daily data points in 2-3 hrs. This is a Drill or what I would deem backtesting and is not done real time. This could also be done on intraday data, such as going back 1-3 days using 1-15 min. charts.

I use a combination of backtesting and practice trading to test out strategies before implementing them with real money. How many trades is this? In reality, it is hundreds of trades. I really take no stock in getting even 50 trades correct, as this does not test my strategy in a myriad of market conditions.

A lot of times when people backtest or practice, I find they do things during this types of trading they would never do funded. STOP DOING THAT! The more closely you can simulate real life, the better it is. It's even better if you can't tell the difference between funded and non-funded.

Why is that important? When you don't think things are on the line, one tends to be a bit more relaxed, making better decisions.

To address have I in reality taken a $200 account to the amounts that I have listed? Not in the past year. I hope I don't have to totally go into this, but it takes great focus and discipline to do this, and my divorce has really messed with my mind. Sometimes I make awesome trading decisions, but consistency is key.
2 Responses
  1. TEBITBY Says:

    OK Doris, you get an "A" for effort. I didn't realize you would put so much effort into responding to my inquiries. I kind of feel bad now because it took you away from spending time with your family, which I agree is WAY more important than trading.

    Also, when I posted on my blog about your $200 accounts I knew that they were not funded because you stated that BUT I am like you. It's all the same for me. People tend to discredit non-funded trades but not I. It's still a feat that should be complemented and that it is why I posted about it.

    I wish you well during this time of change. Keep your head up, and we will be here ready and waiting for your full return to the blogging world (if that's God's will).

    Take Care, PW from P******W*****.com (yes I am not here to promote my blog I just wanted you to know who I am since I have to use my google account to reply)


  2. Doris Says:

    PW -- It's no problem. Eventually I do respond to all the comments, at least at this point since not a lot of people make comments.

    I believe I responded when my children were either not home or sleeping. No need to feel bad. We're all adults here and no one makes me do something, okay?


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