How do you know if you have a good (profitable) Trading Plan? Follow it to the letter for a few months in SIM mode, and if you make a lot of money, then you probably have a good Plan.  No matter how good you think your plan is, you're only going to know for sure by actually following it for a while. OK,  suppose you did follow it for a few months and end up losing money (luckily, not real money)? Hopefully after this experience  you've learned enough over the months to modify your trade plan to one that works. 

Just in case you are not familiar with SIM trading, it's short for SIMulated Trading, and also called Paper Trading.  It's a service available from many brokers where it looks and feels just like a real trading account, except you are only trading play money. 

One reason to SIM trade prior to trading cash, which few people would argue with, is simply to get used to your trading platform.  In other words, to avoid entry errors while you are learning the particular software you will be using enter & exit trades.  You want to avoid the shock of opening your account one morning, noticing a huge unexpected loss, and thinking to yourself  "I thought I had exited that position yesterday". Oops!!!

The use of SIM trading to test your Trading Plan, however, is more controversial.  A lot a smart traders would argue that you are wasting your time, because when real money is on the line you will trade differently than when you know it's only play money.  While I agree this arguement has some merit (you probably WILL trade differently when real money is on the line) I still stick to my advice above: To test your Trading Plan, follow it to the letter for a few months in SIM mode.  Keep reading ...

You could break down the ingredients of trading profitability into 3 components:
Component 1.   Having a good Trading plan
Component 2.   Successfully dealing with your emotions to allow you to faithfully execute your trading plan
Component 3.   Making good judgment calls within your trading plan. 

It is Component 2 that critics would argue makes SIM trading a waste of time.  Will you react the same way losing $5000 in hard cold cash than if it was just play money?  Probably not.  To minimize this drawback to SIM trading, you have to do everything possible when you SIM trade to treat it exactly like you were trading real cash.  So pretend you are trading real money.  Get excited when you have a nice SIM win and scold yourself when you make a dumb mistake that causes SIM loss. 

Here's a method you can try, to help you care more about your wins and losses in SIM mode.  And of course caring helps the experience be psychologically more like really trading cash.  Make a vow to yourself that you will not trade cash in until you have met some specific goal in your Sim trading.  For example, your goal could be to Sim trade with a minimum $250 per week profit, for 4 weeks in a row before you start trading cash.  Since you are eager begin trading cash to really see that money start coming in, every winning Sim trade feels good because you know you're getting that much closer to trading cash, and every losing SIM trade feels bad because it puts it that much farther away.

Still on Component 2,  let's say you SIM trade your Plan for a few months and you end of LOSING a sizable amount of play money.  Then you know almost for sure that your Trade Plan is no good.  Because if you were to use the same plan to trade cash, it's likely the added emotions of trading cash would cause you to trade worse, not better.  Now suppose  you SIM trade your Plan for a few months and you end of EARNING a sizable amount of play money.  Then you start trading cash, but you start LOSING money.  Now you can assume you have a good Trading Plan, but are not successfully dealing with your emotions to allow you to faithfully execute it.  Ok, so it sucks that you spent all this time only to lose money, but at least you have a logical direction to go in to try to fix the problem.

What about Component 3?  What do I mean by "Making good judgment calls within your trading plan "?  It has to do with how you decide to enter and exit trades, whether it's more mechanical or more discretionary.  Mechanical entry and exit methods are predefined in such a specific and rigorous manner that they  require little or no judgment on the part of the trader to make the trading decision.   Discretionary methods are predefined in a more general way and thus require much more judgment.  The more discretionary your entry method is, the more often you will find yourself asking this question: "The charts show that the minimum criteria of my setup has been met, but is this a high enough probability trade to pull the trigger?"  Answering this question wisely requires good judgment, and the best way to develop this judgment is through SIM trading.  The idea is by making trade after trade, over time you begin to develop this judgment.  Whether you SIM trade or not you'll still probably have to go through this learning period, but SIM trading is kinder to your account balance. 

So quit reading blogs, you've got work to do.