Guest post from ForexTraders.com
It’s not enough that you trade a demo account, you test the broker, and his capabilities, but more importantly, you need to test yourself in the process. The best attitude in trading is to seek the faults always within yourself instead of blaming anyone or anything for adverse consequences. In a similar vein, it is better use demo trading to test your compatibility and your competence with a broker’s software before making speculations about others, and what they offer.
Remember that we can never decide what the market is going to do. It will go its own way, that’s certain, and for sure. But we have complete control over what we decide with respect to the future. In that demo trading must first focus on how realistic your plans about trading and your general performance are. Can you really do as well as you always hope to do in this market? Many come to forex with unrealistic assumptions about themselves and the market, and become disappointed when those conjectures do not fit with reality. The good news is that with demo trading we can try and test all these aspects of trading, and in time gain a fair and even unbiased view of what is right or wrong about our conceptions.
In practical terms, we must make sure that we do not see demo trading as a kind of game where anything is fair game just because there’s no risk in our trading decisions. In fact, there’s a great risk in that by behaving illogically in demo-trading you will acquire meaningless expectations about real trading, which can only lead to severe distress in your account in time. Trade exactly like how you’d trade in real market conditions. Of course, it’s altogether a different matter to simulate emotions, but if you can master the technical aspect in demo trading, the odds are good that mini-account trading will take care of the emotional side of the issue as well.
Keep notes, acquire a routine, and do not use the whole capital allotted to your account in imaginary cash. You should only trade with as much money as you’d like to commit in a real market environment. Otherwise, time is wasted, and no real understanding of trading is acquired.
You can test your forex analysis and strategies while demo trading. You can check out the claims of the broker. How much of what he’s telling you is reliable? You can also define and limit your expectations, and dreams by actually testing your plans and seeing how well they fit with reality. There are so many things to do while demo trading, only your imagination, and time constrain your ability to try and test your vision of a forex career.
More on the first step: using a forex demo account for technical analysis.