Demo To Live Trading- 3 Deveopment Stages You Ought To Understand
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Retail investors are in a great position to take advantage of new innovations in trading technology. A few years ago, one had to sit with the broker if he had to learn the trading. Technology has revolutionized the way trading is done. With demo trading, you can actually experience and learn trading. If you want to be a good trader, you should first trade virtually. You will lose this game if you take the plunge directly with real money. Benefits of Demo Trading Demo trading allows you to get familiar with the trading environment. Basic operations like opening a trade, closing a trade, stop loss, different types of order etc can be experienced without any risk. If you want to test a new trading strategy, you can do so with the demo account. Even experienced traders use demo account to test the new trading strategy first. You will save a lot of pain if you trade with demo account first. Open a Micro Account Now that you have traded virtually with a demo account for sometime, you must be itching to trade live. There are few things you need to know before you put the money in your account. It is necessary to demo trade first. But trading live is completely different from demo trading. You will get emotional when you see the trade you placed losing your real money. You can work on controlling the emotional decisions. Before opening a real account with the full amount, you can open a micro account with a very small amount say $ 200. Almost all the brokers allow you to trade with a small account. You can work on controlling your emotions with the help of micro account. If something goes wrong, you will not lose a lot. But make sure that you don't expect to turn $ 200 account into a million dollar account within a year. Fund Half the Amount After you have traded the micro account for a while, its time to jump in and make serious money. But invest only half of the amount you initially planned. The logic behind this is that you don't lose a lot of money if you make an emotional decision. At this stage you are still a beginner. It will take time before you can make a living out of trading. If you do well in this phase of trading and also in previous phase of trading micro account, it will boost your confidence tremendously. Trade with Full Amount If you trade successfully for 3 months and make profits with half the money, then it is time to get in with the full force and put all the money you decided initially. If you don't do well in trading live and lost 10% of the account, it is time to stop and go back to the demo account again. This is a very difficult choice and most people can't admit it. If they continue, they lose all the money. You don't want to do that mistake again. Being a successful trader is a long journey. You can be successful at this game if you are ready for a long journey. You will already be in the top 10% if you understand this fact. You can make trading your profession if you work on developing your skills required for a trader.