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5 Signs You're Ready to Ditch Your Demo Account

Posted by BluFX

 

Ditch Demo

If you are an active trader, the chances are that you have tried demo trading at least once. This is the practice of using simulated trading to practice your trading skills before putting real money on the line. There can be benefits to demo trading - but one thing demo accounts don't give you is the experience of actually trading in a live market.


So - are you ready to get started on a live account? Here are five signs that it's time to make the switch.

Thinking of signing up for a live account with BluFX? Here’s how to trade profitably on a BluFX account>>

Read: How to Trade Profitably On a BluFX Account ⟶


5 Signs You’re Ready to Ditch Demo

1. You have a fully optimized strategy

Trading for real money is a whole different ball game, no doubt about it. You are trading with real cash at risk. To transition from demo account trading to real money trading, you need to have an effective strategy before you start trading on a live account.

A demo account allows you to practice your strategies repeatedly until you get it right, but once that happens, you have no reason to waste more time with demo challenges. Take the plunge and start your forex journey today.

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2. You have developed proper risk management skills

Since everything boils down to chance, there is no way for investors to keep their risk management skills 100% effective all the time. But they can manage risks to some extent by using other ways, such as hedging and stop-loss orders. Create a "risk management" checklist that helps you monitor your portfolio on an ongoing basis. Checklists help you develop good habits and keep you disciplined in your strategy when markets are down.

Still unconvinced? Here are four reasons it’s time to ditch demo accounts>>

3. You have built your trading confidence

Every trader has a different level of confidence before they start trading with real money. Some traders can start trading right away once they have enough information about how to trade. Others need months of practice and learning before they feel comfortable risking their capital in the markets.

For novice traders, this might be the most challenging part of your trading journey. Once you feel confident in your trading abilities, you are ready to move to real money trading.

Your demo account is like a sandbox. It's the playground where you can do whatever you want with no consequences. It's an unlimited resource where you can experiment with different strategies and see what works, all with little or no risk. And that's great. However, it's not the same as using live money. It's also important to understand that this isn't just about discipline. 

When you trade with your own money, decisions are bound to be more purposeful. You'll need to consider things like risk-reward ratios, the historical performance of setups in various market conditions, and how much you can afford to lose on any one trade. These factors will most likely affect the way that you approach the markets. This newfound sense of purpose (and perhaps even caution) is a welcome change for most traders.

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4. You have taken control of your trading psychology

In trading, nothing is more critical to your success than your ability to control your emotions. The most successful traders face fear, doubt, and loss with confidence, knowing that they can overcome them. Most traders make trading decisions based on how they feel about trade setups rather than objective market analysis.

That's a mistake. Emotions like fear and greed are powerful forces that can undermine even the most carefully constructed trading plan.

Trading psychology is a vital part of your overall trading success. If a trade does not go your way, and you lose money, do you go back to square one? Do you try to cover your losses, or are you able to dust yourself off and move forward? Trading psychology is the part of trading that deals with how you handle winning and losing trades and your overall attitude towards trading.

If you have been trading for a while and are still not a profitable trader, chances are your trading psychology needs work. Make sure you get your psychology under control before switching to a live account - your bank balance will thank you later. 

Not sure if you’re in the right place emotionally to trade? Here’s our ultimate trading mindset checklist>>

5. You are now making consistent profits

Making consistent profits in your demo account is a sign that you are ready to trade live. However, make sure that you have good capital allocated to your new account. You should only trade what you can afford to lose.

Read: How to Find Forex Strategies to Suit Your Day Job ⟶

Tags: Trading Tips

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