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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