Three Development States You Should Understand
Advancement in technology has benefited the retail investors immensely. In the past if you had to learn the basics of trading you had to go to the broker office and learn how the currency market works. With the advent of technology, now you can learn from the comfort of your home. With demo trading, you can actually experience and learn trading. In fact it is one of the entry criteria before real trading- trade with a demo account till you are good at it. You will lose this game if you take the plunge directly with real money.
Advantages of Demo Trading
Demo trading helps you to know the trading platform better. Things like how to place order, how to put a stop loss, closing the trade etc can be learned without a penny. Demo trading also gives you an opportunity to test your strategies without losing money. 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. Before you fund your account, you should be aware of different phases of going live.It is necessary to demo trade first. But it is altogether a different ball game when it comes to real trading. You will get emotional when you see the trade you placed losing your real money. There is a way to handle and improve this aspect.
You can practice the real trading with risking as little as $ 200 by opening the micro account. You can open a micro account with most brokers. 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.
Invest Only Half the Amount
After you have traded the micro account for a while, its time to jump in and make serious money. Fund your account with half the money you intend to invest. This way you don’t risk much if you commit mistakes. Remember you are still a novice trader. 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
Invest the full amount only after you trade with half the money successfully for 3 months. If you lose 10% of the account, stop live trading and return to demo trading. This is very difficult choice and most people can’t admit it. They end up blowing the account completely. You don’t want to do that mistake. Do you?
It is long process till you become a successful trader. 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. With meticulous effort of improving your skills as a trader will make your dream of making serious money come true.