Candlestick training is essentially nothing more than paper trading, and there are plenty of people who do well in paper trading, but those who excel in live trading are as rare as phoenix feathers and qilin horns.

A friend once told me that he made 5 million in two months through paper trading, and he eagerly entered live trading, only to end up in a mess. He came to me to complain, feeling that he just had bad luck.

The truth is straightforward: in paper trading, since real money is not involved, there is no concern about gains and losses, nor are there emotions of fear and greed. At this time, if the market happens to cooperate, one might mistakenly believe they have a "natural talent that must be useful."

However, to be honest, paper trading is an extremely useful tool. If utilized properly, it can become the best weapon in your arsenal, helping you to forge ahead in trading and paving the way for you.

Most people approach candlestick training in paper trading incorrectly.

To achieve the desired effect from candlestick training, one must treat paper trading as if it were live trading; otherwise, all your training is worthless.

For example, if during your candlestick training in paper trading, you adopt a trading model of heavy positions, contrarian position addition, no stop losses, significant losses, and trading rebounds, and you end up with high profits, does this mean you can achieve the same results in actual combat? This is impossible.

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The chart shows a record of a paper trade during a review session. During an upward market trend, the trader entered by shorting against the trend, increasing the position weight, and after adding more positions at high levels, the market corrected downward, and all orders were closed at lower levels, resulting in a profit of $4,000.

This simulated account started with $10,000, and a single trade resulted in a 40% profit, which is already impressive.

However, this model is simply unfeasible in live trading. Why? Because after three consecutive short positions, when the market was at high levels, the account's floating loss reached over $4,000 with the third short position.In trading simulations, having a 40% floating loss on an account does not cause psychological stress. When the market retraces, one can still hold onto their positions, waiting for a significant profit before closing the trade. However, when you are trading with real money, a 40% floating loss can be equivalent to losing $4,000 on a $10,000 investment. At this point, it's natural to feel extremely uncomfortable and fearful, worried about losing even more and potentially all of your capital. Most people's psychological tolerance for drawdown is within 30%, and they may be tempted to close their positions at a loss, only for the market to reverse afterward. Many traders with experience can relate to this situation and the emotions involved.

This is the difference between trading in a demo account and a live account; the mental state for both is entirely different. If you are still without a clear trading strategy and are recklessly trading at random, the outcome could be even more disastrous.

The primary purpose of a demo account is to test the long-term profitability of your trading strategy, not for casual entertainment. It's crucial to keep this in mind.

Sometimes, if the time frame for candlestick training is too short, it can lead to the illusion of recency bias. The preference for quick and easy gains is a natural human tendency, like the current trend of short videos and content, which many find satisfying but can gradually erode your spirit, making it difficult to focus on a task for an extended period.

When using a demo account for candlestick training, it might be challenging to practice long-term patience, as the desire for quick results can be strong. Traders who might have been inclined towards medium to long-term strategies may force their approach into short-term tactics just to get a result sooner, without the patience to wait.

Moreover, market trends are cyclical. If you happen to encounter a market that aligns with your strategy during your training, it's natural to attribute the success to your skills, believing your strategy to be flawless and your methods effective. Then, when you transition to live trading, you might encounter a market that doesn't cooperate, leading to failure.

This can happen because the training period for candlestick patterns is not long enough to represent the true performance of a trading system or to reveal the full picture of market trends. Making decisions to enter the market prematurely can lead to recency bias, causing misjudgment of your strategy.For instance, when a continuous trend develops over half a year on the daily chart, trading in line with the trend at a smaller time frame, such as one hour, can yield substantial profits. However, if the daily chart enters a consolidation phase after half a year, the same one-hour trend may result in much poorer trading performance.

So, how can this issue be resolved? How should one correctly practice candlestick analysis and review past trades?

1: Do not use a demo account indiscriminately. Strictly follow the details and steps of your trading strategy to truly train with candlestick charts. Execute with discipline, be patient, and treat the demo account as if it were a real account. Only then, when you transition to live trading, will everything feel familiar and natural.

2: Whether reviewing past trades or using a demo account, use the same amount of capital and position size as you would in live trading. Do not be overly cautious with 0.5 lots in live trading and then suddenly trade 10 or 20 lots on a demo account. This can create an illusion that money comes too quickly and easily, leading to complacency and overconfidence.

3: The number of times you practice candlestick training and the time periods involved must be sufficient, ideally reaching at least a hundred to two hundred instances. This is because only then will you have experienced both profitable and losing phases. For your trading strategy, it is essential to go through a complete cycle to understand how much you can earn in profitable times and how much you can lose in losing times, and whether the overall outcome is profitable. This is the effective way to test your strategy.

The existence of demo accounts and the practice of reviewing past trades is actually a great advantage for us as rational and serious traders. The market is not short of people who indulge their nature; what is lacking are those who are willing to delve deeply into research and persist with patience.