Demo trading facilitates trading with artificial money by crafting trading strategies and adopting proper trading style. So new babies to existing pro traders; all can take the benefits of demo trades since these trades are contributing highly to learn and practice trading without being impulsive since there is no risk to lose money. A trader affords to make mistake and learn from the mistakes and implement all the knowledge and expertise in live accounts.
Of course that is one use, but without fear and greed, you will find your actions will not mirror real trading. Demos are better for learning how to use the software. Trading with small trading sizes will be better for learning to trade.
Some strategies signals when they reach a statistical number of being false, the next number may yield a better result. A consolidation zone breakout on a timeframe, if it fails to break after 5-6 signals, the 7, 8th may have a higher probability of success. It’s one way of running a strategy without actually letting it transmit the signal to generating order.
Fear and greed can be eliminated with the correct written trading plan and 100% adherence to the plan. Develop a strategy and place the odds in your favor. Become the casino and not the drunk roulette player.
As a new trader with very small success with trading. 3% gain, going live will run you through a plethora of emotion(s). I believe it's critical to expose yourself to these feelings, simply even funding your account, and looking at your balance will give you an idea of things. You don't necessarily need to trade right away. I started with the minimum balance my broker requires, with money I could afford to lose, and a very conservative risk level on my trades. I found that when I placed trades over a certain amount, fear took over, so I would lower my lot sizes - and with the new sizes I placed, I felt very good with the risk vs reward ratios. In addition, you need trading laws or rules - something like a checklist to verify before you place a trade. Checking these laws that align with your personal risk management style is key, and alleviates a ton of stress from yourself. Will you leave trades on while you sleep? Will you close out positions before you go to bed? Would you like to check your trades once in the morning, and then once at night? Hourly? Things like this, can help you be more comfortable with your trading, at least in my opinion.
Garett Sim, I personally like demo trading because it saves me money and helps me become a proven, consistently, profitable trader. I do not see the sense in trading live, real money, with no edge on winning. As far as trading with real emotions with paper money, this depends on the person trading. Faking it only hurts the trader. Trading paper with real goals and real money is possible and works for me and keeps money in my pocket to know what i am doing.
If that is true, when will real trading make sense? Then, how will you know you would have executed the same trades without any changes?
Hello Robert Morse, IMO, trading real money makes sense to me, when I make money in demo. When I triple my starting balance in demo, then I risk real money. It's just that simple. Meanwhile, keep capital away from the market. This is just my simple thinking. Why should I risk money, if I am not 1000% sure/confident what I am doing have good chance of making money in the future? I have lost about $6500 trading real money and had 0 confident in what I was doing, making allll kinds of mistakes. Why lose more, if I don't know what I am doing trading? Wish I had known this years ago. I could have use that money for a vacation or something. Again, this is what makes sense to me. I love trading, but I am not ready to trade real money.
Agreed. But practicing over and over a process that does not provide any edge, will never move you forward. Find edge Test to make sure works Test with real money to see if still works. Adapt to current markets. Scale up over time. Find another edge, do it again, as nothing works forever. Too many traders think hard work gets them profits. Working on the right path gets you there. Bob
I think you're both right, a trader should approach trading as a hybrid between those two ideologies, It would make no sense to dabble with real money, if your imaginary paper trading skill is absolutely horrible to none. But I personally hate the word "edge" in trading...I prefer to think of it as Skill/Experience/Wisdom instead. But more importantly, It's 2018, Make Trading Great Again...High-Five` Good luck and Mazal tov and May the Farce Be With You,