Trader Dale Volume Profile
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Backtesting & getting started<br />
Phase 3: Micro trading<br />
I bet phase 3 would be for a lot of people, demo trading. Trading a<br />
demo and a real account are two quite different things. Don't waste<br />
your time on trading a demo! I suggest you find a broker that allows<br />
you to trade very small positions (mini, micro lots) with good<br />
spreads/commissions. Then I suggest you trade your new strategy with<br />
really small volumes for some time.<br />
My tip for you is: don’t do this with too small of size. The reason is that<br />
if you do, you probably wouldn’t care at all about your positions. You<br />
need to feel little excitement for the psychology to work. You can use<br />
for example 10-20 % of your “normal” position size. So, if you normally trade with 1 lot, then use<br />
0.1 – 0.2 lot.<br />
This phase is quite crucial because for the first time you trade your new strategy with real money.<br />
The question is: when to move further to phase 4? My advice is to take your time because you<br />
want to test your strategy in all sorts of market conditions and situations. You want to<br />
experience good trading periods and also series of losses. Don't dump the strategy if the first 5-<br />
10 trades were losses and don't move to phase 4 right after you started and immediately had a<br />
winning series of 10 consecutive trades. Take your time and see how the strategy performs. If you<br />
see that it fails (in a long run), then I suggest you make some adjustments and return to phase 2.<br />
If it proves profitable in a long run, then go to phase 4.<br />
Phase 4: Half positions<br />
Don’t waste your<br />
time on trading<br />
with a demo<br />
account!<br />
In this phase, you already know that you have a good profitable strategy. Don't make any changes<br />
and only concentrate on good execution of your trades. Trade with roughly 50 % of your "normal"<br />
volume size. The reason is that the strategy is still new and now is the first time you trade it with<br />
adequate volumes. Psychological factors are much stronger and you also need to practice good<br />
trade execution. There still can be some little mistakes made (due to psychological factors or bad<br />
execution of the trades). Before moving to Phase 5 you need to eliminate them.<br />
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