Learning trading on a demo account
- Analyst AZA
Why the long learning trading on a demo account is a way to defeat
This article is aimed primarily at beginners, those who recently joined online trading and yet thinks and chooses their path in stock trading (it does not matter whether you choose a forex or any other type of trading).
Trading fairly is a complicated thing; it requires knowledge and, first of all, practice. Realizing this, beginners in this business before opening a real account with real money, are trying to get training (for example, forex training, there are much different seductive advertising) and practice the obtained skills through a demo account.
If a novice had already decided what kind of trading he would hold, he will need to choose a broker (for forex this is forex broker), through which he will have access to the educational score.
On the one hand, there is nothing wrong with this approach.
What are its advantages:
- Opening a demo account is for free;
- You do not risk your money, trading in demo mode;
- The funds that you virtually use are not limited in their financial claims
- You can try various trading strategies and analyze them without fear of parting with the money and go into debt.
On the other hand, professional brokers very often advise beginners not to open a demo account and immediately start trading with real money. The only exception out of this rule is when you do not know anything about any exchange or the terminal or the stock glass or other features of trading. And even in this case do not sit long on the school run, as fast as you can go to real trading.
What's the matter? The fact is that as soon as you start working with real money, you will encounter serious problems. Which are they?
1. The actual order book of quotations (the terminal glass) is different from the glass on a demo account.
2. demo account can not be seen slipping (when buying or selling a different number of contracts you will always get the same price, but it would not in real life).
3. Incorrect execution of orders to buy/sell (rapid application executed at prices that are much lower or much higher than the current price, the reality is different).
4. Operation on a demo account is slower than on a real account.
5. Since you are working with fixed collateral, it will lead to an incorrect calculation of free and reserved money.
6. You can not see the current balance, often on a demo account, it does not show, you will see only a commission.
7. You are not able to see and analyze the data on your chosen instrument for various periods, as you will only see the dynamics of the current trading day.
8. You do not learn to control your emotions when trading, as they are eliminated when trading with virtual money.
So out of the first seven points, it is clear that the strategy, which you would try to develop on a demo account, during the transition will not fit a real account. But there is also the eighth. We put it to the end of our list.
It would seem that it is not so important. But this is only at first glance. Not accidentally, the emotions are called the main enemy of the person on the exchange. If you do not learn how to control your emotions, then you are guaranteed to lose money.
Why with the same strategies and tactics the newcomer is losing money, and a pro, using the same operating time successfully earns? It's all about emotions. Entering the excitement after the close of profitable deals or a desire to reduce the loss after losing steps ruined a lot of newcomers. No Classes will help you until you do not experience these emotions and learn how to control them. In real life of stock exchange.
It is time to summarize.
The result, in general, is simple. In the long successful work on a demo, the account beginner has the illusion that he had finally found the strategy that will help him to work on a real account. But this simply does not exist.
Trading - is swimming in a troubled financial ocean with its visible and hidden currents, which you must learn to recognize. No strategy, no curriculum, no luck (which usually ends quickly) will not give you a guarantee of success.
To learn how to swim in the stormy ocean you need quite a bit to stay on the beach, learn the basic rules and then pushed off from the shore, steer your ship to the desired course.
Knowledge, expertise, intuition and a little luck - are the main components of success. And most importantly, that you will like this work (and trading is hard work with its ups and downs). Only then, you will come to the aim. The target of each person is different. And it's not the money.
Faster repel from the shore, and you'll get it all.
Trading fairly is a complicated thing; it requires knowledge and, first of all, practice.