The Importance Of Demo Trading

 

Demo trading is obviously an important part of growing as a trader.  I don't believe that any new trader should just jump into the market trading with real money if they don't feel comfortable trading.  This is why demoing is so important.      

It allows people to learn forex without worrying about losing any money. This is obviously important for traders that are just starting out.

You can test out different strategies until you feel comfortable enough with using one.

The problem that some traders have is that they become too dependent on demo trading.

They get so used to trading on a demo that they never feel confident enough to trade with real money.

This happens to a lot of traders.  Unfortunately demo trading can't simulate the emotions that are involved with trading.

If you ever visit any forex forums, you'll notice a lot of threads where traders discuss the kind of trades that they are taking.  You'll see plenty of times where traders discuss how much success they have had on their demos, but when they start trading with real money, all of a sudden they are losing pips.

The reason is really obvious.  When you are trading with a demo, you don't have to worry about dealing with fear and greed.  When there is nothing at stake, you're obviously going to feel a lot more comfortable.  But the key is to be able feel that comfortable when you are trading with real money.  The only way to do that is by taking the leap and opening a real account.  You'll never get a sense of what you are capable of as a trader by overdemoing, then you'll be trading on emotions.

My suggestion would be to demo until you feel comfortable enough with a system or method.  You feel confident with the back testing you have done and with your trading results on a demo.  Then, don't prolonge it, just open up a live account.  The more you prolongue it, the worse it's going to be.

Check out Trading In The Buff to Learn How To Trade Forex Successfully Just Using Price Action.

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