While there are no set conditions you need to meet before you make the change, there are factors that will help provide a good indication. Let’s look at some of them...
Have you done your time?
There’s no specific amount of time you need to trade on a Demo before making the move to a Live account, but it stands to reasons that you don’t want to change too quickly - just as there’s little point in waiting a long time.If you were to open a Demo trading account, do one or two trades and change to a Live account the next day, you probably haven’t spent enough time getting to how the system works. Conversely, if you’re trading regularly on the Demo account for months on end without any success, you should consider whether trading is for you.
At MXT, our free Demo trading accounts are available for 30 days. We find that if clients are trading regularly on a Demo account for about a month, they get a pretty good understanding of how the market works, how their strategy works and what they can realistically expect to achieve.
Are you emotionally ready?
A Demo account is fundamentally no different to a Live account as it has all the same features and functionality. When you make the transition, the only difference is that you’re using your own funds instead of virtual funds. But it’s a big difference – one that attaches an emotional weight to your trading decisions and can alter the way you trade. And the more you place on a trade, the more emotionally involved you’ll be.In an ideal world, you could completely remove emotion and be objective about all your trading decisions. But - unless you’re using an EA - that human element will always have some effect and you might need some emotional reinforcement in your decisions. For example, try to remember that if you’ve been trading successfully on the Demo account, there’s little reason to doubt you can trade successfully in a Live environment by applying the same strategy.
It is extremely important to look at how your personality and trading psychology will affect your trading style - whether it be live or demo trading.
Can you afford to lose?
Any time you lose a trade on a Demo account, it doesn’t cost you anything. But on a Live account, when you lose a trade you lose real money. And regardless of how much you believe you’ll trade in the exact same way in the Live account as you did in the Demo, you probably won’t (refer to "Are you emotionally ready?", above). So you need to accept that, due to the risk inherent in all trading, some loss is a part of trading and it happens to every trader.The fundamental part of loss is whether you can afford it in the first place. If not, you should consider how and why you’re trading. But if you’re prepared for loss, you can accept it, learn from it and use it to become a better trader.
Are you ready to adapt?
If you find you’re not trading as effectively in the Live account as you were on your Demo account, how prepared are you to change the way you’re trading? Ideally, you’ll have honed a strategy in the Demo environment which, if you stick with it, will lead to profit in the long run. But if that’s not the case, your experience with the Demo account should still have set you up with the fundamentals you need change your approach. Perhaps it’s something as simple building confidence by trading smaller lot sizes or trading in less volatile periods.
Editors’ Picks
USD/JPY flat-lines below 151.50 after soft Japanese CPI data
USD/JPY stays defensive below 151.50 after the release of a soft Japan's CPI report and mixed Industrial Production and Retail Sales data on Friday. Japanese verbal intervention also weighs on the pair amid the holiday-thinned conditions on Good Friday. US PCE inflation awaited.
AUD/USD buyers lack vigor above 0.6500 amid Good Friday trading lull
AUD/USD is trading listlessly above 0.6500 in the Asian session amid light trading on Good Friday. The Aussie pair shrugs off encouraging comments from China's FX regulator, as price action remains subdued ahead of the US PCE inflation data.
Gold flirts with record highs above $2,230, all eyes on US PCE data
Gold price flirts with record highs around $2,230 during the Asian session on Friday. The uptick of yellow metal is bolstered by the safe-haven flows amidst growing economic concerns and the prospect of interest rate cuts from the US Federal Reserve.
Optimism price could fall as nearly $90 million worth of OP tokens is due flood markets
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Will they won’t they cut rates is the question of Q2?
There has been some significant push back from Fed and Bank of England members around the timing of rate cuts, and the Bank of Japan still haven’t physically intervened in the FX market to stem yen weakness although they are threatening to do so.
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