Forex for beginner chap.2 demo account

Every trader always start with DEMO account which is good to start and it is correct process to begin with. Many people doing good on DEMO account(can make hugh profit) but lose or broke when trading with real account(real money). Why???????

Reason 1: demo tradding has no consequences

When you’re trading on demo, your actions have no real consequences. A demo loss isn’t nice but it doesn’t hurt like losing real money.

When becoming a better trader, you need to feel the consequences of your actions and you have to take full responsibility for your mistakes if you want to grow. It’s just too easy in demo trading to just forget about the last account blow-up and refund a new demo account.

Reason 2: demo trading has no emotions

Emotions and trading psychology are maybe the most important aspect of profitable trading and what separates the professional winning trader from the losing amateur is how he handles his emotions. In demo trading, the impacts of emotions are not present and the pressure that comes from seeing unrealized profits vanish when price turns, when widening the stop loss burns a hole in your account or when the current losing streak ate up all of your previous profits will not matter that much in demo, whereas in live trading it can break a trader.

I regularly see traders switch from demo trading to live and then their previous profitable track records get completely crushed. They often falsely believe that the market has changed but more often than not, they weren’t prepared for the impacts of live trading psychology.



Reason 3: Demo traders gamble

This is now a very serious and dangerous problem of demo trading. I have seen quite a few traders who martingaled their demo account from $1,000 to $1,000,000 or constantly added to losses just to find out that they could sometimes turn a loss into a big win. When a traders tries such harakiri manoeuvers on his demo account and then sees that it might work for a certain period, he is more likely to also do it on his live account.

Especially when a trader has seen that he could potentially make a lot of money with a risky technique, he is likely to keep funding live account after live account because just one good streak will pay for all the blown up accounts. This has nothing to do with trading anymore and such a person is just a pure gambler.



Reason 4: You cannot treat demo like a live account!

Traders will often say things like “I just treat my demo account like a live account” or “I will treat my $100 account like a big $10,000 account”. Unfortunately, you cannot fool yourself so easily. You will always KNOW that you’re just on demo or that your 1% loss on a $100 account is just $1 and not $100 like on a $10,000 account.

All the good intentions go out the window once you hit the first wall in your live trading, you’ll revert back to your old impulsive trading behavior because “you’re just on demo anyway and it doesn’t really matter that much”.



Reason 5: Demo trading will ruin your trading

The previous 4 points all lead to this one: a trader who stays on demo for too long will eventually ruin his trading style and it then becomes very hard to unlearn his negative behavior.

After a few months on demo, especially if you have never traded live before, you will translate everything you have done on demo 1:1 to your live account. If you have been undisciplined, unstructured and all over the place with your risk and your general approach, your live account will quickly bleed out because you don’t know any better and this is normal for you. It is very hard to unlearn the bad behavior and most traders will just go back to demo and keep repeating the same old cycle.


So, what now?

I know this is a lot to swallow for most because it challenges most of what you have learned so far. Thus, I want to provide some tips around demo trading and share my principles:

Learn the basics on demo as a new trader, the first few weeks should be on demo until you understand how everything works
When you start a new system, stay on demo (for a short time) until you know how to find trades and what qualifies a signal
Switch to live trading as soon as possible
Start with an account size that you can lose because you will
At one point, you need to make the decision to fund a bigger account where the losses will hurt more
If you don’t have money for a big account, then stay with a smaller live account because even smaller losses will already hurt you and you’re more likely to learn form them as well
Carefully observe your actions: are you too sloppy on a small account? You don’t care about the small losses? You don’t adhere to risk management and position sizing? Figure out why and recognize patterns in your trading
Of course, you should not trade with money you cannot afford to lose and trading is very risky but you have to make that scary step eventually.
Blowing up live accounts or losing money can be seen like a tuition you pay in the markets. You just need to make sure that you learn from your mistakes so that the lost money had a positive effect after all.     #Profitshow#  #Todayanalysis#  #trading#