When to Take Demo Trading to a Live Trading Account
It is widely known and essential for all new and beginner forex traders that you begin with demo trading when live trading account.
Learning all the Essentials from Demo Trading
By the time you’re done with your demo account you should understand all the mechanics of the market. You should have an extremely thorough understanding of how the market logistically operates, how to use a brokerage account, how to use your trading software, and how to initiate trades. No trader knows absolutely everything about the forex market, but you will need to understand the fundamental basics of how to trade.
In addition to understanding your trading platform, you should also know which currency pairs you’re interested in trading. Each currency pair operates in unique ways and strategies that work with one may not work with another. This has a practical aspect too: certain currency pairs may not be supported by a brokerage, affecting where you can open your account. You should have practiced trading with these specific pairs and you should feel confident in predicting these pairs.
Before you start live trading, you should be showing consistent levels of profit. You should not be on a down turn; even if you have made money overall, you shouldn’t begin investing in a live account if your recent trades have been failing. Your strategy may no longer apply to the current market. Generally a trader wants to show anywhere from three months to a year of solid, profitable trading, depending on their confidence and risk level.
The forex market is special because you can get started with such a small amount. However, starting with a small amount also means that even with leverage you won’t be profiting much. The more you can invest the more money you’ll make, but as with all investments you should never risk more than you can afford to lose.
Developing a Working Trading Strategy
Coming up with some kind of working strategy is probably the most tricky part.
Your trading platform will provide all the tools necessary to identify trading indicators, but you’ll need to develop working plan and trading strategy regarding when to trade and how much to trade.
Every trader tailors their strategy to their own personal risk levels and knowledge, even though they may start out with research and analysis gleaned from other sources. Developing a working trade strategy requires creating and developing an account with proper money management and implementing a working process to find, monitor and place profitable trades.
Not every trade will be a win; in fact, that is virtually impossible. The overall goal is to ensure that there are more wins than losses, and even a slight margin can lead to incredible profits over time. If your strategies are profitable and you understand why they are profitable you should be ready to begin live trading on the forex market.
Get as much Market Knowledge as possible
Knowledge is crucial in forex trading.
The more insight you obtain prior to placing each live trade, the better. The market and each currency pair change significantly over time, and this is why it’s so critical to be able to adjust your strategies. It’s not enough to know just how the market is now; you need to have avenues for updating that knowledge. Forex Money Management
It is vitally important to resist the urge of jumping into live trading too soon also. You will also learn critical lessons regarding money management and potentially overextending yourself. The market acts like a living, breathing entity, and it goes through phases.
Knowing about Money Management
Everyone can perform a successful trade from time to time in a live trading account.
A small difference in available leverage could throw off your money management strategies.
Money management is all about establishing discipline as a trader.
Without money management and discipline, you will still be able to make money on a winning strategy but it will not be sustainable. You can eventually lose everything because you aren’t protecting your profits in your account. With appropriate money management techniques, you can truly secure and retain your profits while minimizing your losses.
So, are you Ready to Begin LIVE Trading?
There are some very real experiences that a trader simply cannot establish through the use of a demo trading account.
If you have confidently covered all the aspects mentioned, you should be well prepared to take your trading to a live account.