When to Move from Demo to Live Forex Trading
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Loading... - Atanas Iliev
- 26 Apr 2022
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7 Signs You're Ready for a Live Trading Account
If you're a new trader who has learned a profitable trading strategy, deciding when to move on with live trading can be challenging. Most traders spend too much or too little time on demo accounts because they compare themselves to others. If you're making plans to trade live funds, here are seven things you should have before doing so.
Efficient Trading Tools
Your trading tools and resources have a significant impact on your trading results. Ensure you have the right trading platform and only trade with regulated brokers like Oanda. The efficiency of your broker can affect your trade execution and management.
Unregulated brokers may manipulate your trade orders, including entries and exits. Trading with regulated platforms will protect your capital and give you an edge if disputes arise. You may also need to get the right indicators or trading robots to keep you at the top of your trading game.
Profitable Track Record
Before trading live funds, you need to ensure that your trading strategy produces a consistently rising equity curve. This means that your strategy should be able to make enough profits to mitigate your losses over time. You can track your trading results using trading software like 'FX Blue.' This analysis shows your win rate, the average risk to reward ratio, and the overall performance of your strategy across several currency pairs.
Ensure you make consistent profits for a significant amount of time (months or years) before moving to a live account.
Defined Trading Plan
Your trading plan is your trading rule book to help guide your trading decisions and choices. You should use your demo account to craft a functional and profitable trading plan that suits your trading style. While trading your demo account, do not execute random trades. Instead, follow the rules in your trading plan and then evaluate the results you get after a series of trades. This helps you determine what aspects of your trading plan need to be adjusted or optimized. These changes allow you to develop a solid trading plan that can guide your trade execution and management on a live account.
Psychological Resilience
Psychological resilience is the ability to withstand difficult situations and adversity. This is much needed as a trader because it ensures that you're able to resist the psychological impact of losses or losing streaks. You can build mental resilience through demo trading by desensitizing yourself to your trade outcomes to improve your trading psychology. New traders find it hard to trade live accounts due to the emotional pain and trauma of losing trades. You can grow above this by thinking like a professional trader - understanding that losses and wins are inevitable, but with the right trading strategy, your successes will constantly mitigate your losses. Make sure you adopt this winning mindset before trading a live account.
Adequate Trading Experience
The financial market moves in different phases, and some of these are easier to trade than others. Getting enough trading experience ensures exposure to different trading conditions - ranges, trends, and market reversals. This experience helps you adapt to these conditions and devise ways to trade them using fundamental and technical analysis. Traders who are exposed to new market environments while trading live funds and without adequate trading experience often find it challenging to make consistent profits.
Sufficient Trading Capital
Having enough trading capital is crucial to your success as a trader. Trading with funds that you can afford to lose helps relieve the stress and tension of live trading. Traders who trade with borrowed funds or life savings are likely to make emotional trading decisions that leave them susceptible to trading errors. Read More...
