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Paper trading is widely discussed regarding its merits, and whether it is of value to a trader as they try to make the transition to real money trader. One viewpoint is that since paper trading is not real, the profits are meaningless, and are no indication of real money profitability. An opposite viewpoint would state that paper trading is an important step in the trader’s learning progression, and regardless of whether it is rea

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

l, if the trader cannot ‘properly’ paper trade, then they will not be able to real money trade.

I began trading in early 1995, with the intentions of becoming an options trader; my first trading education was through an oex options teaching service. Besides options training, the service included ‘tape’ reading, trade management AND sp500 index futures trading – also included in the service was the prevalent attitude that paper tr

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ading was for ‘sissies’.

So I was a new trader, trying to learn and understand completely new concepts and ideas - what was called a trading method AND I was ‘practicing’ with real money – because paper trading was for ‘sissies’. What did I accomplish, besides a big draw down in my account? I quickly introduced to trading psychology and the related implications – something else I also knew nothing about. Losing money and a trad

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ing psychology ‘wreck’, both from the losses and thoughts like I was too ‘stupid’ to ever learn how to trade, became a combination which took me out of futures trading, and then unfortunately carried over into my options trading which I had previously been doing well with. I just couldn’t take it any more – I had to somehow start all over, or just quit for good.

Paper Trading Viewpoints

Consider: simulator fill prices are not r

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

eal and won’t be attainable with real money. Even if this is correct, is it really an issue unless the trader intends to be a scalper, trading for very small profits, and thus each tick is critical? Granted, but shouldn’t a beginning trader be very selective, focusing on learning their method and the ‘best’ setups that method provides? This would be my viewpoint, and in this capacity paper trading fill prices are not an issue.

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

Consider: the trades are being done with no risk. No, there isn’t any financial risk in paper trading, but I actually haven’t met nearly as many profitable paper traders as one might expect. Why would this be the case if being able to trade without risk was such an easy thing to do? As well, what about self-esteem risk, and an attitude like - how can I be so bad that I can’t even paper trade? The risk feelings like these are p

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

robably greater than that of financial risk, and if they are going to surface, you would want to encounter them before trading real money. As well, even if the issue was only one of financial risk – wouldn’t you want to begin with the confidence of knowing that you were paper trading profitable? It would be hard to imagine a losing paper trading being able to profitably trade real money.

Consider: there is no emotion involved w

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

th paper trading. I was in our chat room watching a paper trader post their trades in order for me to give them feedback, and I noticed that one of their specific plan setups wasn’t done. When I asked why, the trader told me that they were ahead for the day and didn’t want to risk those profits. But the profits aren’t real – how can you not take a ‘base’ method setup when paper trading – isn’t that the point? Would you be in ag

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

reement, that if paper trading profits could be viewed in this fashion, that it has the ability to become very real and thus emotional to the trader? I would suggest that this is related to paper trading really not being ‘so easy’, and as mentioned above, self-esteem risk can be very emotional.

Besides examples like this, emotions can be added to the paper trading process. Throw away your simulator, and then go into a chat room

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

and post all of your trades – no ‘youknowwhating’ around where you wait to see if the trade was profitable before you post it, like a number of traders that I have seen. What’s the point, and when you consider the underlying implications of ‘needing’ to do this – the issue certainly isn’t about whether paper trading is of value or not, but certainly best to find out before trading real money. You must post immediately and without

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

lag, giving your direction and entry price, along with subsequent posts of any partial profits, and of course your exit, which ultimately is the determinant of whether the trade was profitable. There is no need to make any comments, or answer any questions regarding your trades – simply post the particulars as fast and real time as possible AND see if you feel any emotions doing this in front of the rest of the room while you go

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

through a series of losses. Do you want to add even more emotions? Go through the same posting process, but do so where the rest of the room actually knows the method that you are trading, and what the trades ‘should’ be. You will quickly find out just how emotional paper trading can be – actually a very valuable exercise for the paper trader to do.

Paper Trading And Making It Further Beneficial

I have two predominant problems

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

with paper trading, but this is with the trader’s approach, and not with paper trading by definition: (1) the trader does ‘things’ paper trading that they would-could not do with real money (2) the trader views paper trading profitability, instead of paper trading proficiency, as the guideline of whether they are ready to begin trading real money.

I have seen too many paper traders, continuously and knowingly, over trade ‘non-pl

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

an’ trades, with trading size that is greater than they could afford the margin for in a real account – let alone accept the risk of loss, while also holding trades for risk amounts that they would not accept with real money. Viewing paper trading as a ‘step’ in the learning progression and transition to real money trading, it is critical that the paper trader only trades exactly what, and how they would trade with real money. Do

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

’t allow yourself to turn paper trading into a game, supposedly because there is no risk – the risk of making bad habits that you can’t correct is tremendous, and will circumvent any attempt to trade real money. This is the time to learn YOUR basic trading setups, and make necessary adjustments to them and your entry-exit timing, in order to then make money trading them – this is NOT the time to turn your simulator into a pinball

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

machine flipping at any ball that comes near you.

There is a problem with focusing on trading profitability -vs- trading proficiency. To begin with, profitability places the focus on money instead of on plan. And what is profitability – if you take 10 trades and make $75 are you profitable? Technically, if you are net ahead you are profitable, but what if those same 10 trades had a potential of $1,500, and you only made $75 – a

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

re you really profitable? This is what I am referring to when I think of trading proficiency. Instead of focusing on the common metrics, such as win:loss or win size:loss size ratios, I am most concerned with the win size:potential win size ratio, and want to maximize this percentage to the extent that is possible.

For instance, when a trader asks about adding trading size, taking the attitude that if they can make $100 trading

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

3 contracts, then they can make $1,000 by trading 30 contracts, the first thing I ask them is what is their proficiency ratio – why increase contract size and the corresponding trading risk, if you ‘should’ be able to make more money from smaller size? This is especially important for the paper trader, where they should not regard simple profitability as an indication of readiness to trade real money, but consider proficiency – fo

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

r instance, begin trading real money when you are 60-70 percent proficient with your paper trades.

So What Is Your Viewpoint Regarding Paper Trading?

I never thought that I would ever make a dime trading, let alone be able to trade for a living or become involved with trying to teach others to trade – was this simply a function of starting over and paper trading? Granted that is too simplistic, however, I do know that it would h

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ave certainly changed the beginnings that I had, while very much shortening my learning curve, and reducing a lot of pain.

Clearly, I am on the ‘side’ that believes that paper trading is not only beneficial, but that paper trading is also necessary – however the value received will be dependant upon the trader’s approach and attitude. Needless to say, paper trading as described is something that I have always strongly recommended

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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