Often traders take a plunge into live trading well before they are ready. The result? Many of them blow up their accounts faster than they would have imagined. If you’ve just started out with Forex, knowing when to move from a demo to a live account is one of the first challenges you’ll face.
So how do you know if you’re really ready to take the risk of putting real money in the market? While there’s no rule set in stone that can tell you “for sure” if you’re ready for live trading or not, there are some signs that indicate you’re prepared to open a live account. Here are five such signs.
- You’re Familiar With the Basics
First of all, you should be familiar with the basics such as different Forex trading orders and the concept of leverage etc. Also, prior to making the move, it’s advisable to get a good feel for how leverage works and the levels you’re comfortable with before you open a live account. If your understanding of these basics — not just in theory, in practice too — is solid, you can step forward into live trading.
Not just the basics of the trade, you should also be familiar with your strengths and weaknesses before entering the live market. After all, you will be putting your hard earned money at risk. Knowing yourself and the market well can help you prepare yourself mentally before taking the leap.
- You’ve Gained Adequate Experience
Just like doctors need to do internships to become full-time medical practitioners, Forex traders also need to practise consistently over a certain period of time before going live. A demo account is the easiest way to step intoforex trading and learn the ropes as you progress. Demo trading allows you to experience risk-free trading and gives you opportunities to build and test your strategies in the financial market. Also, working with a full-time trader can help newbies learn a few tricks of the trade.
- You’re Doing Well With Your Demo Account
If you’re getting steady gains through your demo account, it’s a good sign. However, it could be a case of beginner’s luck rather than your skills. Therefore, it’s best to assess if your gains are an outcome of what you have learnt through practising and educating yourself or simply a matter of chance. Only you can be your best judge.
When it comes to evaluating your performance, we suggest you monitor your profitability based on the number of trades you’re winning every month rather than the overall profit or loss amount. If not, a single large trade could counter a string of smaller trades, distorting the results of your performance evaluation. For instance, if 7 or more out of your last 10 trades earned you profits, then you can consider switching to a live account. Otherwise, it’s best to stick to your demo account until you’re achieving better results.
- You Don’t Let Emotions Determine Your Moves
No matter how good you are at trading, it’s unrealistic to expect that you’ll hit the bull’s eye with every trade. While there are chances you will make huge profits, there will be times when you’ll lose money as well. Losses are an inevitable part of the forex trading game. Therefore, it’s only after you’ve learnt to accept failure and move on that you’ll be fully prepared to bear the financial risks of entering the real market. Are you able to keep a check on your emotions while trading, especially when the markets move against you? Do you stick to your trading strategies even during high-pressure situations? If yes, then you are ready to try your luck at live trading.
- You Know Your Trading Platform Well
You should also know your trading platform like the back of your hand. When you’ve practised trading on a particular platform and grown comfortable using it, you’d want to use the same platform while trading live. This is why experts recommend practising with a demo account from the same broker you plan to open a live account with.
If you’re not a seasoned forex trader (yet), it pays to choose a broker that offers a trading platform that’s user-friendly and easy to operate — apart from other important factors such as educational offerings, account minimums, security of transactions, and above all, excellent customer service. As a forex broker committed to help traders navigate the complex global trading market, Aristrex offers a choice of some of the industry’s best trading platforms, solutions, and tools.
Sign up for a risk-free demo account with us to practise trading on our platform and sharpen your skills for going live!