Most new traders are usually advised to start by opening a demo account and ‘paper trading’. This is where you use pretend money to place your trades rather than real money. Just about every broker and financial spread bet company will allow you to open a demo account and to trade with pretend money.
For the most part, this is a great idea as you can place your trades safe in the knowledge that if things go badly wrong you won’t lose any ‘real’ money. Equally, of course, any successful trades you make only earn you ‘pretend’ money . That said , if you are able to say for example, double a £100k account to £200k or more in a short space of time it does give you enormous confidence in your ability.
However, before you start trading with real money I can assure you that any success you have had with your demo account does not guarantee you success in the real world of trading. And the reason for this can be put down to one over-riding factor and that is ‘emotion’.
Trading £100, £200 per pip or more on each trade you place on a demo account is easy. You place your trade and then let the market get on with it. You apply your chosen strategy and either make a profit or a loss. There is absolutely no emotion involved. Transfer that to the real trading environment and there is absolutely no comparison. Suddenly emotions come in to play. You will be trading with real money and as a result will experience all the emotions that go with it. You will feel fear of losing your money in a losing trade and greed of wanting more in a winning trade.
So whilst using a demo account is a good idea for testing out your trading strategies please do not imagine for one moment it will be the same in the real world of trading.
To learn more about trading I strongly recommend the Ian Williams trading course.
Please note that I receive no monies or commission whatsoever for recommending this course.
To learn more about trading I strongly recommend the Ian Williams trading course.
Please note that I receive no monies or commission whatsoever for recommending this course.