Should I Be Trading A Demo Account?
There are so many people who are trading live accounts who should not be and plenty more trading a demo account that refuse to take the plunge. This blog has been written for you and to hopefully help you decide if you should be trading live or not.
Amount of time you spend trading.
You have to spend a good few months trading a demo due to the ever-changing Forex market. A strategy that you had working on your demo for six weeks might not work in two weeks' time. You need to be in a position where you are confident that you can adapt your trading strategy to work with the market before you start trading live.
Make sure that the time you are spending trading on your demo truly reflects the time that you will trade. Do not take time off work to perfect you trading then go back to work and only trade half the time you did while on a demo because your results will not be the same. When you are building your trading plan, realistically decide on the amount of time that you can spend trading and stick to this while trading demo and live.
Have you tried various different trading styles?
The best way to advance in trading is to surround yourself with people who are older and wiser (as far as trading is concerned) and have had their fair share of learning curves. Whether this is through online groups, trader socials, clubs or classes make sure you have some support around you. You never know what you don't know until you know it. The amount of tips and ideas you can pick up is incredible, however remember to take everything you hear with a pinch of salt and always test it on a demo account first.
Try lots of different trading styles. Experiment and find out what type of trader you are. Are you intra-day,, end of day, a scalper or a mechanical trader? There are plenty of traders out there trading all sorts of different strategies on their live accounts, burning money and then blaming everyone but themselves. You need to work out which trading style suits you and your timetable as you will sometimes find it difficult to stick to.
Are you winning more traders than your losing?
This is obvious, but do not trade live if you are not making money. Only once your winning trades outweigh your losing trader over a long period of time should you go live. The mistake that many beginners will make once they go live is to bring emotion into the equation as soon as they have a long losing period. Once this happens they start changing their trading style, losing more money and brining even more emotion into trading. If however you have experienced long losing streaks with your demo account but know that this isn't forever or you adapt your trading strategy is incredibly encouraging.
A trading journal is encouraged in each blog and that is because it really is that important, especially when you are starting out. You will make mistakes on your demo account and unless you document them correctly, you can easily continue to make them. From writing down the reasons why you entered a trade, how it went and the reason why you came out will all help to build a picture of your strengths and weaknesses.
Use this time to develop a trading plan, taking into consideration the amount of trades you place per month, money in your account, time you have to trade and the amount of money you need to make. You can perfect your trading plan on a demo account by seeing what works and amend it by finding out what doesn't work.
No trader not matter how much experience should trade a live account without a clear idea of what they want out of trading.
Only once, you have decided on your trading style, spent at least six months trading demo, win more than you lose, analysed your trading habits and created a clear trading plan should you go live. If you can't wait that long and you believe that trading is a get in quick come out rich solution to a money shortage then you should not be trading.
Trading takes tell as skill, however if you put the effort in the rewards are defiantly there for the taking.ime and patience as w