Demo trade is one of the biggest mistakes that a beginning trader can make. This is the least productive method to find out hoe to trade right. Practicing demo trade, every trade decisions is made by zero emotions. In fact you just practice how to make input-output without running any risks. And the fact is the more risks you run the more profit you get. As demo trade has zero risks, then it has no reward. In fact this practice increases risks of getting profit, when you start trade with real money, because you have learned to make decisions that can not be accepted in the real world. when you start making these decisions in real trade, this will bring you to the financial crash.
Traders must have 100% of technique skills to trade successfully, but they must use only 15% of these skills in the trade. Other 85% of the skills are necessary to keep your emotions under control. profitable trade is technical for 15% and emotional for 85%. So, how do you keep your emotions under control?
If you want to understand that, you need to determine what sum of money you can risk during your educational process and this makes trade a productive and educational experience. I do not offer you to run risks with all your capital in every transaction in order you to make sure that you trade ‘emotionally” on the markets. we all have different financial situations, and every person has a certain area where some sum risked money provokes a certain emotional level. Do you think that a person who has 2 millions US dollars of capital can feel some strong emotions running risks with 100 US dollars? If this trader buys 100 stocks for 20$ and the price of the stock falls to 19$, this won’t make the trader to worry much. But if this trader has 10 000 stocks in this situation, then he/she will feel very strong emotions.
No one can determine an emotional level of another person. Every trader has to find his/her “emotional level of risk: in order to make the trade an educational experience. I have a friend who has 25 000$ of capital. He has found out that a loss of 100$ creates an emotional environment for him, and the diapason from 70$ to 130$ is his emotional level of risk. When this trader runs risks with 50$ then this emotional level is not enough. When he runs risks with 500$, this is connected with too much risks, and his emotions are too strong in order to think clearly and to make right decisions. After he got a month of trade experience, his emotional level of risk has risen. Now he feels himself comfortable but still emotionally running risks with 400$.
The secret of educational and profitable trade is to watch after your emotional level of risk very carefully and to change your actions when you have to. This also can mean the lowering of your risky capital. My friend, who felt himself comfortable with the risk of 400$, had to lower this level to 300$ after he and his wife found out that she was pregnant and decided to buy a house as their rented apartment was too small. This has imposed a great responsibility on his capital and the payment for the house has lowered his risky capital. A lot of factors can influence on the emotional level of risk and only you can judge where this level should be. No one knows your situation better than you. For those who do not know anything about direct trade at all, demo trade can be useful only when they study trade platforms. It is not very wise to trade with real capital trying to study the software. If you do not knowhow to adjust graphics, the list of tools, an order for input and so on, then it is recommended for you to trade on a demo account, if you follow a certain set of rules. The majority of demo accounts allow you to trade with accounts of different sizes. They also provide you with fictitious implementation of orders.
As in every other niche of our life foreign exchange market needs some knowledge.
Surely, you can start forex investment and get quite successful in it. However sooner or later the losses will come. This is when one might think “Why didn’t I start with a good forex trading education?”
This does not imply that after reading even the top materials you will start closing trading positions with huge income, but this knowledge will save you from lots of dangers. And even if you make up your mind to get the help of a forex managed accounts service, still you will be able to make a much wiser decision.
And a final piece of advice – today the web technologies give you a truly unique chance to choose what you want at the best terms which are available on the market. Strange, but most of the people don’t use this chance. In real practice it means that you must use all the tools of today to get the info that you need.
Search Google or other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and join the discussion. All this will help you to create a true vision of this market. Thus, giving you a real chance to make a wise and nicely balanced decision.
P.S. And also sign up to the RSS feed on this blog, because we will everything possible to keep this blog tuned up to the day with new publications about Forex currency trading.
