Think Demo Trading Will Make You Successful?… Guess Again
Guest post from visionsofaffluence.com
Demo trading. We are all familiar with it. We have all heard the advice of the experts that tell you that you should demo trade first in order to learn how to trade. Indeed demo trading is thought by many to be the path to trading success because by allowing people to trade without risking any money gives them the chance to learn how to trade without the fear of losing money. This lack of risk however is what makes demo trading ineffective at creating successful traders, because without the risk of losing money you will never be able to deal with the emotions that cripple so many traders.
Now I’m not saying that you shouldn’t demo trade at all, but if you think that you are going to spend some time demo trading and then be able to go live and start making profits then you have another thing coming. You see trading in a simulated environment without any risk of loss will not help your trading. In order to become a successful trader you are going to have to master you emotions and get over the psychological handicaps that plague most new traders. There is no way you can do this trading a demo account because you won’t have any real money at risk and therefore you won’t be able to deal with the psychological aspect of trading.
In order to become a successful trader you are going to have to learn how you deal with risk when there is real money on the line. In a demo account you aren’t risking anything so that trading amounts to little more than a videogame. It’s a simulation that will teach you the mechanics of trading but it will not prepare you for the many psychological pitfalls that will await you once you go live. I have seen many traders make a killing in a demo account but once it comes to real money they fall apart. So if your trading a demo account and think that you are going to go live and be a trading superstar then you are in for a rude awakening. Once again I’m not saying that you shouldn’t demo trade at all just that you should think of it as orientation and that class doesn’t begin until you open your first trade with real money on the line.
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See what other traders are doing in real forex accounts. Check out Currensee. It's free..
is this a way to entice people to loss their money with half-baked knowledge and benefit the brokers ?
please, there are 2 componets to this : money management and strategy/analysis/techniques/finding ur comfortable personality
you cannot trade without startegy and analysis or techniques .take all the time to get comfortable with ur testing out your analysis and strategies and techinques and ur personality .
the other component is money management . yes , this is where u have to careful. perhaps this is what is being highlighted here .
i would suggest start out with micro-account and see if u can consistently produce the same results with as ur demo account.
only when all the jigsaw puzzle falls in place , then u can practise as a “Doctor”
if not , you will kill ur patients (or urself) and become a menace to society.
the market is always there. if it isn’t , so what ? there are many ways to make money in this world.
understand ?
Still have to demo trade before go LIVE. Demo trade mainly to acquire the skill of mastering the platform, strategies and the market feel. Once you have done it, go for LIVE trade and you will make your money there.
This article is ridiculous. Anyone who does not begin trading with a practice account is a fool. Do not listen to anything in this article it is simply an article written to favor the broker. I advise you to practice with an account for at least a month or two until you can achieve consistent results. I understand that there may not be as much emotion attached because you’re not dealing with real dollars, but when investing you should ONLY be dealing with dollars in which you can afford to lose. Period. And if you do lose, then oh well. You gave it a good run. BUT you should also minimize your risk by only investing 3-5% of your account at any given time. Do NOT dump 50% of your principal into a pair because you are “for sure” it’s going to go your way.
Again, open a practice account first. Period.
Thanks for your comments!
I generally advise folks to demo until they are comfortable with the trading platform, prices, position tracking, and all that basic stuff. Once they’ve gotten to that point, getting into live trading as soon as is practical (with a VERY small account) will provide an early dose of trading reality. Knowing what it’s like to trade with live money is very helpful in the process of developing a strategy because for some people strategies which are doable in demo (ones with large drawdowns, for example) are not doable in real life.
Thanks for your comment John. The path you’re offering is the right path.