Forex Trading Demo and Real Secrets
As a beginner forex trader, your broker usually recommends to do a simulation first using a demo account before trading on a real account. Through simulation, you will be able to better master the basic skills that a trader must possess. You will also be able to build a trading plan, master risk management and better understand trading psychology without risking your money.
When you can practice the theory that you have learned and can make consistent profits, your confidence will increase. Usually you will assume that the simulation on the demo account is a waste of time, then you immediately open a real account. You think that three, four or five consecutive profit transactions on a demo account will be able to repeat in the real account. Is it true?
In fact, most beginner forex traders get frustrated when they find that it is not that easy.
Why are many beginner forex traders frustrated?
There are 3 causes:
1. Emotions in Real Accounts More Biting
A trader as much as possible tries to put aside emotions when making decisions in trading. Even so, it is not possible to really get rid of emotions from a human, especially if the money is a “bet”.
As an illustration, try to compare your feelings when you first make a transaction on a demo account with real money on a live account. Does your heart rate increase? Do you feel your blood flowing faster? Do your fingers shake a little? If so, maybe it is either because you are too excited or even very nervous about the first experience.
2. Simulation does not involve real money
Even if you try to treat your demo account like a real account, in reality you have no risk at all. You can make transactions and losses many times, but you are fully aware that you will remain safe financially. Even if you make hundreds of errors in the simulation, you will still be able to feel safe, because in fact you can make a new demo account at any time.
The story will be different if you experience this in a real trading situation. Failure to fail in trading has the potential to hurt your confidence. In turn, this will obscure your objectivity in making further decisions.
3. The temptation to violate the trading plan is stronger when trading on a real account
You will feel more emotional because face to face with real risks. As a result, the temptation to do bad habits will be stronger. These bad habits are violating the trading plan.
For some traders, the desire to prove that they can succeed on a real account just as they have done on a demo account can even trigger new problems. For example overtrading and violating their trading plan.
How do you trade emotionally?
Focus on the process you do, not on the profit generated. Make transactions one by one and focus on implementing the right trading plan and risk management. Make sure the risk allocation is indeed a sum of money that is ready for you to “sacrifice”.
Don’t mind whether the results of the transaction will be profit or loss. No need to think about it. If the process is correct, the results will follow. This will help ease the pressure and help you to concentrate more on your transactions.
Then, make it a habit to write your trading journal every time you finish a transaction, this is a very good habit.
Congratulations on “going to class.”