Nick Goold
Many brokerage firms offer demo accounts. Demo accounts are a service that allows you to learn how to operate the trading platform and test your trading strategies without risk. Before trading with a real account, you should practice on a demo account until you can profit.
On the other hand, if you use a demo account for too long, you could struggle to transition to a real account. Moreover, since real accounts use one's own money, stress can impact a trader's decision-making. Therefore, mental control is necessary to follow your trading strategy under pressure.
Losses in a demo account and a real account have different mental effects. You will find it much more difficult to cut your losses in a real account and may also lose confidence after a losing trade.
Nevertheless, the trader will eventually need to move to a real account.
So let's consider the steps involved in moving from a demo account to a real account.
Step 1
When trading in a real account, be prepared to accept the risk of making a loss. No matter how good a trader you are, you will have losing trades.
Step 2
Start trading a small real trading position to reduce your risk and build confidence.
Step 3
Make sure you use the same trading strategy in your real account as in your demo account and that you manage risk similarly.
Step 4
If the results in the real account are poor, take a break or return to the demo account to improve your trading skills.
Step 5
Change your mindset to focus on the next trade. Instead of dwelling on past bad results, focus on improving your trading strategy.
The key to trading is to find a strategy with an edge. First, understand the patterns and characteristics of the market to build a trading plan. Then, once you have found a profitable strategy in a demo account, execute the same strategy in a real account. Understanding the challenges in a real account will help you in future trades. It can take time to become profitable, but keep a long-term perspective and follow your trading plan.
