Why ONLY Live Forex Trading With REAL Money Matters
One of the things that makes trading Forex so attractive is the accessibility and low barrier for entry. As a matter of fact, most brokers offer a free trading platform (like Metatrader4) and the ability to open a DEMO account. This means new traders can get everything they need to “check out” trading Forex for free.
I personally trade with the Free Metatrader4 platform. It is the most popular trading platform and most brokers provide the MT4 trading option. But I want to share with you my thoughts on whether you should use a demo or live account.
Demo Or Live Trading Account?
You’ve probably been told, or think it is a good idea, to start trading on a DEMO account. The theory is, once you can trade on a DEMO account for a certain length of time, you can then upgrade to a live account and start trading real money. I believe this is a big mistake.
Don’t get me wrong, DEMO accounts are good for learning how to place trades and maneuver around your trading platform so you don’t make mistakes with real money on the line. But as far as gaining real experience as a trader, DEMO accounts are practically useless.
The truth is, when real money is on the line, your emotional reactions change. The stress of trading is magnified when real money is at risk and can force you to make decisions you would not make trading on DEMO with fake money. Since your ultimate goal is to make real money… you need to learn how to trade using real money.
I find this to be true even if you are using a Forex signals service like Forex Investing Live. Even though you are not make the trading decisions for yourself, you still need to think and act like a trader when you place and manage trades. This means controlling your emotions which can only be experienced with real money on the line.
So, for getting acquainted with the trading platform and learning how to perform all the trading tasks, demo accounts are great. But for really learning how to trade a strategy, you need to understand your emotional reactions, which can only happen if you are trading on a live account with real money on the line. Trading strategies can be very easy to learn and using Forex signals is even easier… but understanding your reaction to the trading requires some level of risk.
Don’t get me wrong, I am not talking about being reckless and placing trades with huge amounts of financial risk. In the beginning, you can fund your account with less money than you plan to use once you gain confidence. Or, you can simply use a very low position size at first. But it is best to have some money on the line to understand the stress involved when money is at risk… and your reactions to that stress.
Plus, if you are going to make real money trading Forex you are going to have to open and fund a trading account anyway. You’d be surprised how many people get stuck on demo accounts and never make the step to opening and funding a live account. But this is an important step toward success.
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Opening, funding and trading on a live, funded account with real money under live market conditions shows you are dedicated to succeeding… and are trading a strategy that you have enough confidence in to at least put some money at risk. Don’t underestimate the value of this important step in your Forex trading. Use a DEMO account to learn how to place trades… but when it comes to learning your role in the trading and your emotions during trades, ONLY a live, real money account will do.