I'm sure I and others have written about demo accounts in this thread, though I cannot remember exactly, so here's my view on them.
I'm sure many people reading this thread will have or are currently trading demo accounts. I traded a demo account for a couple of years before I ever placed a live trade. I was working full time, so educated myself about the markets in whatever spare time I had, and I knew that I was nowhere near ready to put on a live trade until I actually understood what I was doing, but then again, I was in no rush to achieve anything..I was in it for the long term.
For me, trading demo was great, as I could learn by trial and error, without worrying about losing money, and I knew that I would be far better prepared to face the psychological challenges of trading once I was turning a consistent profit on demo, because this proved that I did at least have the technical know how to put on winning trades, and not only to put them on, but to understand why I put a trade on, why I exited where I did, why I won a trade, and why I lost one. In short, trading demo showed me that I was capable to making money in this game.
Once I traded live, then it was a different ball game as we all know, but not completely, because even when I was kicking myself for letting my emotions get in the way, I always knew that, emotions aside, I could trade, and trade well. I had proved this to myself on demo, and if I could do it there, I sure as hell could do it live with the required self-control.
The really important thing about trading demo though is that you have got to treat it like a live account, or at least try your damnedest to do so. This means applying the right amount of risk to your account, which in my case was always 1%. Any deviation from this, so for example, applying higher leverage just to make up for a previous loss etc, and the whole thing is null and void, because this is the sort of thing that will kill a trader very quickly in a live situation. So trading demo requires iron self-discipline, because if you haven't got that trading demo, then you are not going to have it trading live either.
As always, this is just my own point of view, and I know that we all approach the markets very differently. What kept me in the game was that I was never in a rush to ' get there ' as it were. I knew how long it was going to take, and I was prepared to pay the cost, whatever that may be.
I'm sure many people reading this thread will have or are currently trading demo accounts. I traded a demo account for a couple of years before I ever placed a live trade. I was working full time, so educated myself about the markets in whatever spare time I had, and I knew that I was nowhere near ready to put on a live trade until I actually understood what I was doing, but then again, I was in no rush to achieve anything..I was in it for the long term.
For me, trading demo was great, as I could learn by trial and error, without worrying about losing money, and I knew that I would be far better prepared to face the psychological challenges of trading once I was turning a consistent profit on demo, because this proved that I did at least have the technical know how to put on winning trades, and not only to put them on, but to understand why I put a trade on, why I exited where I did, why I won a trade, and why I lost one. In short, trading demo showed me that I was capable to making money in this game.
Once I traded live, then it was a different ball game as we all know, but not completely, because even when I was kicking myself for letting my emotions get in the way, I always knew that, emotions aside, I could trade, and trade well. I had proved this to myself on demo, and if I could do it there, I sure as hell could do it live with the required self-control.
The really important thing about trading demo though is that you have got to treat it like a live account, or at least try your damnedest to do so. This means applying the right amount of risk to your account, which in my case was always 1%. Any deviation from this, so for example, applying higher leverage just to make up for a previous loss etc, and the whole thing is null and void, because this is the sort of thing that will kill a trader very quickly in a live situation. So trading demo requires iron self-discipline, because if you haven't got that trading demo, then you are not going to have it trading live either.
As always, this is just my own point of view, and I know that we all approach the markets very differently. What kept me in the game was that I was never in a rush to ' get there ' as it were. I knew how long it was going to take, and I was prepared to pay the cost, whatever that may be.
2