The online trading arena can be extremely daunting for any virgin trader. Let’s face it, with all the visual noise and information coming at you from all angles who wouldn?t be a little intimidated?
With this data overload it makes complete sense that the key to online forex trading in general is education. And one such tools to use when you are learning about forex trading are demo accounts.
So what type of Forex demo accounts are available?
One of the most popular trading accounts with a demo option is MT4 and MT5.
And one of the most frequent questions I get asked is how long should someone spend on a demo account before jumping into the market for real?
My reply is; when you feel confident to really start learning about trading.
Forex demo accounts are indeed useful to test the feed and execution of the broker or to test strategies and to get familiar with the trading platform but to learn trading they can in fact be a hindrance.
You see, the biggest problem in trying to learn trading on a demo account is that the money you are trading with is not real which means there is absolutely no risk.
You can trade as much as you want without a care in the world as even if you lose all the fake money it can easily be topped up with more fake money.
The other issue with this fake money on your demo accounts, is that its more than likely a lot larger amount than what you would be trading with in your live account leading to false expectations and misleading risk management.
Trading with no monetary risk means you are not trading with any real emotions. The Devil may care attitude to trading is easy on a demo account, but once you opened you first live trade with you own money that quickly goes out of the window. You heart will start beating fast, panic will set in as you start seeing a loss and your reactions which were more relaxed and calculating on the demo become impulsive and erratic.
Trying to learn trading on a demo account also won’t teach you some key areas such as not being too greedy, not controlling the fear of missing out which causes you to jump in too early and the one of the biggest traps of all which every trader goes through, the battle of hope and fear.
The battle of hope and fear is a big dark pit that many fall into and many find themselves unable to dig their way out. Hope and fear are the emotion that causes the newbie trader to let their losses get bigger and bigger while their winning trades are closed too early making only small profits. This eventually leads to an account being wiped out.
To learn trading, you need to go live. Only in a live account will learn who you are, what emotions you will experience and how to control such emotion. On a live account you will also experience the pain of loss which will then lead you to realize you need discipline and a trading plan to make it work. As the famous saying goes, no pain, no gain.
