A demo account is a great way to ease into the forex market. You can spend as much time as you want going through market moves, setting your own trading style and practicing.
You can keep your trading journals just as you would if you were trading in real time so you can learn from them and gain experience in the complete trading process. But at some point, enough is enough. It will be time to hit the market with live trades using your own money. How to go about the transition from the demo account to a live account can be exciting if you know what to expect. Hopefully, you have a broker that you can trust to help you with the switch.
Stick with reasonable expectations
While you could hit the ground running, so to speak, and begin with successful trades, that could just be what’s referred to as “beginner’s luck“. You won’t know if it is your skill or if your wins were random until you have several trades to record in your trading journal. But for many new traders, the results are not pleasing. That is actually more of the norm. So the advice would be to keep those first trades small. Don’t risk your trading account by putting too much out there too early. Live trading is a whole different game than using a demo account, because it is your own real money that you are risking. The pressure of trying to choose only winning trades is great, as is the fear of losing. So play it safe and conservative in the beginning, while you’re getting your feet wet.
Don’t depend on market conditions
So let’s say that you’re trading using your demo account and you have a stream of wins. This might give you the confidence to say, “Hey, I can do this!” and transition to your live account. Well, you may have done well in the market just because there were certain conditions that you understood. Then, as you make the change to a live account, the market changes. When you step in with trades using real money, you haven’t understood how the market changes affect your trading and you can suddenly begin losing. This is more than just a little bit frustrating, but take into account that it can happen. Study the new market atmosphere and trade accordingly.
Look at the long run
When you are critiquing your trading results, don’t fall into the trap of over-analyzing every trade. Be diligent about marking all the deciding factors down into your trading journal, but don’t analyze them until at least the end of that day. One day of trading won’t be conclusive, so go over the weekly results and again monthly results. Look at trends and how you reacted to them. When you have enough trades that you can make accurate conclusions, only then should you make changes to your trading strategy.
In short, trading with a live account has a different mentality than with a demo account, so take it slow and easy!
