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Transitioning from a demo to a live account when trading Forex is a reasonably simple procedure. Depending on your broker, funding an account and starting live trading could be as simple as clicking on a webpage. In the end, most brokers want you to trade live, and the demo is the first step in the process of signing up a new client.
One of the most important things to note is that the trade of a live Forex account is at least psychologically very different from a demo account. After all, you're losing money now, and it's much worse than a trading mistake. If on a demo account you make a mistake, you're only dealing with your pride, whereas in a live account, your pride and money are at stake.
Demo Accounts Provide a Learning Curve
You have a steep learning curve when you initially begin to trade. You receive fake money to start trading with when you activate your demo account. All trades you do are fictitious, but the data and analysis get performed in real-time.
While you may be eager to get started, using a demo account will allow you to:
- Prepare yourself for the real world of trading
- Assist you in practicing your skills
- Allow you to choose the type of trading you prefer and the strategies with which you are most comfortable
- Prepare your mind for the emotional rollercoaster of trading
- Make it possible for you to comprehend the data and charts
How Long Are You Supposed to Demo Trade?
The amount of time you need to spend on a demo account varies from person to person. Some traders recommend spending time on a demo account for one to three months, while others suggest a minimum of a year. However, if you have some experience trading, one to two months should be sufficient time on a demo account.
Take as long as you need, and don't feel rushed if you're new to the industry and don't feel ready for a live account. It's important you transition gradually to a live account to reduce feeling anxiety.
5 Signs You're Ready to Live trade
It can be challenging to move from a demo to a live account. These 5 signs will help you determine whether you are ready to begin live Forex trading.
1. Live Trading Excites You
Demo accounts can be helpful and fun initially, but you will feel you've taken everything you can from it at some point. If you get excited about transitioning to a live account, this could be a sign that you're ready to live trade.
2. You Feel at Ease With Your Trading Platform
You need to feel at ease with everything about your trading platform before considering moving to a live account. You should be comfortable with the analysis tools and enjoy exploring the platform. While aesthetics aren't profitable, looking at a screen that you like will improve your experience.
Many trading systems allow users to customize their user interfaces. Ideally, you want to build a welcoming screen. You do not want to open your computer and face many graphs, charts, and data.
The broker you intend to use for live trading should be the same on your demo account, as you will already have good troubleshooting of any problems or issues that can arise. You can avoid big trading mistakes by fully understanding your chosen trading platform, so take your time and get over any doubts you may have.
3. You've Practiced and are Comfortable with Your Trading Strategy
One way to know if you're ready to switch from a demo to a live account is by understanding various Forex analysis tools and indicators and being comfortable with your trading strategy. The demo account is your platform to experiment with different strategies and find one that works for you.
Your strategy will vary and adapt as you gain experience with actual trading. That is, however, a natural evolution that should also not be sped up.
4. You Consistently Gain Profit
Successful traders will all agree that Forex trading is not a get-rich-quick scheme but that your long-term strategy should include profiting. Use your abilities to locate high-probability setups or trades with appropriate reward and risk ratios rather than focusing on massive gains.
Every month, examine your profit to see if your strategies are working and make any necessary adjustments. It's not a healthy or sustainable practice to evaluate your gains at the end of each trading day.
5. You're in Control of Your Emotions
Since you're using real money in a live account, you need to keep your emotions under control. It's a sensory overload, and it's easy to react, especially if you're just getting started. The learning process includes learning how to manage your emotions to make educated choices.
What to Consider Before Transitioning to a Live Account
The following are important factors that should be considered before you decide to move to a live account:
- The risk level. Your demo account has provided you some risk exposure, but the actual thing is incomparable. Ensure all the risks involved are adequately assessed before making financial commitments.
- How much time do you have available to trade? Is it going to be your full-time job or just a way to supplement your income? Trading occurs during defined hours, so you must be sure that within these hours are available.
- Check for hidden charges. You don't want to spend extra, especially if the trade doesn't go your way.
It should be simple to go from demo to live trading, but it is often difficult. Ensure you've practiced and have a strategy in place for all possible market scenarios.
Start with the smallest position size available when trading on a live account. This might feel like a step backward after trading larger positions on the demo account, but you can't afford to let anxiety influence your trading decisions. You'll be able to increase the size of your position without becoming anxious gradually.
If you focus on these things, your move to live trading will be much easier. If you have any doubts, use your demo account for a bit longer until you are completely confident.