The great importance of demo account for beginners

Demo account is great to learn the technical aspects of your software and to test your system. However not everyone can take a demo account seriously and you will have problems to see how your emotions cope with the market conditions if no real money is on the table.
You will get used to the trading platform while you keep learning to trade. Your mentality will stay focus and can act by your logic.

Any thoughts guys?

 

I view trading like doing a medical degree in that it is intricate, requires a lot of learning and crucially practice. Of course demo is risk free but so is practicing on cadavers. Does that mean you should hack them to pieces? No. Practice as you mean to go on or fail.

 

one of the greatest metaphors about trading, really

 

What demo/sim does which is most significant... is that it reveals strategies that DON'T WORK! Wouldn't you like to know that before committing capital?

 

Hello mercury-croc,

From a business perspective, why in the world would anyone every trade real money LIVE without confirming they can make money in DEMO first?

That just sounds weird.

 

You'll be surprised by how many idiots trade with real money without knowing their strategy has a positive/negative expectancy and/or without being familiar with their trading platform.

Just as importantly, too many traders do trade without knowing if they can handle the stress of trading with real money especially when market environments change on them to something they're not familiar with.

wrbtrader

 

Hello wrbtrader,

I am surprised. I just left demo after about 2 years. Too risky to lose real money with no confidence.

 

Oh I strongly disagree. The only thing I think Demo might be good for is to learn where the buttons are to buy or short-sell a stock,account balance,etc. When paper trading you always know in the back of your mind it's not real and not real money on the line. That fact might cause you to do cavalier and reckless things. Emotions are not high like they would be if it were real money being lost. I would much rather see a Newbie trade super TINY positions with real money than paper trade with play money. It will teach them better how to deal with emotions of fear,greed,etc.

 

Hello tomkat22,

Yes I guess that is a good point. We can not forget about those darn emotions.

 

A Demo/ Sim account is the only way to start.

If you have your proven strategy and you have back test it, and then give 60 trading days on a sim.
and you have a p&l which is what your back testing results gave you.

Then and only then can you move to the next stage.