Forex Mistake #24 – Forgot The Demo? You Shouldn’t!

Why Forgetting the Demo Account Could Get you Broke?

Let’s be honest here: Forex trading is not for everyone! Some people are simply not cut out for trading real money and dealing with high risk everyday. There is nothing wrong with that: some people cannot play the piano, others cannot boil an egg right but they can do other things so I believe that everyone should find the thing they are good at and stick to it. If you wanna play the piano, you find a piano (and probably a guy with a musical ear) and you assess your chances of becoming a good musician. If you want to become a Forex trader, you find a Demo account and start trading it. So keep reading to find out the reasons why a Demo is a must.

 

How Forgetting the Demo Could Get you Broke? The Pink Shirt

A newbie piano player cannot play in a big concert hall right from the start (unless their father owns the building or something like that). I don’t know any pianists but I imagine the road is far more difficult than waking up one morning, saying “Hey I’m gonna be a piano player!” and the next day you’re receiving applause at the Carnegie Hall in New York. Countless hours are needed to learn any craft and Forex is no exception but the good thing is that training and learning can be free in Forex with the use of the Demo account. Basically, this is a virtual money account that uses the same data as the live account (yea, the one with real money) so you can practice and learn without any risks. It’s also a good way to see if Forex is really for you.

By now you’re probably asking what’s the deal with the pink shirt. Well, lately I see men wearing pink stuff. I don’t know what’s that about and why would a man think he looks good in pink – hey, I grew up when Kurt Cobain’s style was cool – but anyway, if the fashion addict in you thinks you need a pink shirt, you can go into a clothes store and try it on. Hopefully you’ll change your mind, but that’s just my opinion. The idea is that you can try something on before investing money. It’s the same with Forex: open a Demo, practice, buy and sell currencies, see if it’s something you could do profitably for a long time and only afterwards think about investing. At first you will be overwhelmed by all the numbers, technical indicators, types of orders and all that, so believe me when I tell you that you don’t want to have real money on the line when that happens, just how you don’t want to go to a rock concert dressed in a pink shirt.

 

The Dangers of the Demo Account

Learning to trade real money using a Demo account is the right way to do it, but you must be aware of some things. The most important. I believe, is the psychological aspect: on Demo you will never feel the fear that accompanies real money trading and this means that once you invest money in a live account, you will still face an unknown feeling. A widespread concept is that you should double a Demo account three times before going live. Ok, if you can achieve that, you clearly know what you are doing and you are more than just a newbie trader, but I’ve met a lot of guys who smash it on Demo accounts and then they cannot replicate the success on a Live account. The main reason for that is they didn’t feel the pressure of actually losing money and when they are faced with it for the first time, fear and doubt start to creep in. “What if my stop loss should be wider? Ah, but then I will lose more money if it gets hit. I’ll keep it tight! Ah but then the trade doesn’t have enough room to breathe.”. So the big danger of a Demo account is failing to understand that it will just help you to some extent. Making a million bucks on a demo account doesn’t mean you will perform the same in a real environment. Demo means practice and you cannot achieve success at anything without practice but demo money doesn’t buy you anything and doesn’t guarantee anything.

 

Welcome To the Big Stage!

No matter what, you should always start your trading career with a Demo account. It won’t prepare you for everything but you simply cannot invest real money straight away, without first learning the basics (and more) on a Demo account. Although the Demo helps you to hone your technical skills more than psychological, you will gain confidence in your trading and confidence can be a great ally. Think about it this way: you’ve studied piano for years at home and now you are finally ready for your big concert. You’ll still have to face the jitters of playing in front of a real audience, but you will be a lot more confident in your skills because you know you aced the play at home. It doesn’t guarantee a success on the big stage, but it sure makes things easier.

 

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