If you decide to take advantage of the advantage offered by many online brokers to practice trading with a demo account using “virtual money” to get used to their platform, you will notice that these brokers usually state – either directly or implicitly – that the terms of the demo trading are completely realistic and correspond to the trading environment Real. Most of the time, though, this is not the case.
The role of emotions in the real trading of Forex
We have previously shown how emotions affect real trading, so we will not waste any more time explaining this point, and it may be best to check again our free section on articles on trading psychology to learn more about this aspect.
Even when you move from trading 5 standard contracts of “virtual” money to one mini contract with your own money, the emotion will still strongly influence your performance unless you learn how to control and manage it by placing pre-defined stop and limit orders (not by changing them over time) to limit From your losses and secure the profits.
Big balances in demo accounts make trading look easier
The ability to trade in large sums inevitably affects trading opportunities, at least from the point of view of the strategy used and the rules for managing money, which gives the false impression that you can make abundant profits by simply “buying and maintaining” some currencies.
It does not look like this on the ground unless you are fully aware of what you are doing. Do you have steel nerves to buy a coin and hold it for a long time even when your losses multiply 50, 100 or 1000 times due to leverage? Unless your risks are accurately calculated, you will still be exposed to the margin call even before the deal gets a chance to recover from the initial losses.
A high balance also helps reduce the risk of margin call. Have you ever made a mistake trying to simulate the trading methods you intend to use with your own money by trading mini contracts, but forgot to place a stop loss order. Despite the high risk of the “buy and hold” strategy, the practical reality proves that it is achieving good returns in the long run, but this assumption may not be true when trading with small balances.
In other words, if you have a balance of $ 100,000 and you trade one standard lot of 100,000 units, and assume a leverage of 1: 200, then you can incur a loss of more points compared to trading with a balance of no more than $ 2,000 under the same conditions. If you try to “buy and hold”, you will face the margin call sooner or later – never forget this.
How to prepare yourself for real trading in the Forex market
There are a few points to consider to prepare yourself for the “big jump” from beta to real trading:
Initially, do not risk more than 1 to 2% of your account balance in a single transaction, by committing to placing the appropriate stop loss orders and avoiding that percentage to exceed 5% in all cases.
Do not start real trading unless you have a proven strategy and clear rules for managing capital, as well as making sure that you can follow them strictly.
Read our free articles on trading psychology and try to make the most of it.
Register each transaction and write down the reason that prompted you to enter, exit, and the outcome of the deal.
Ask yourself after losing a deal, do you feel angry: If you are already angry, try to avoid trading until the next day.