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Demo or real account?

Trading starts with a demo account.

Although there is a dismissive attitude towards trading on demo accounts among many traders. This is considered a frivolous occupation, a waste of time, pampering. Let’s allow ourselves to disagree with this.

You can’t do without this first step, at least in order to understand the trading terminal, learn how to open and close orders. A huge advantage of a demo account is the complete absence of risk. Whatever happens there, up to the loss of all demo money, it will not affect your real wallet in any way. If you have a virtual million dollars in your account, after a couple of months you have leaked it, then you won’t even shed a tear. Again, this is a huge advantage that should be used.

On the other hand, the deceptive ease and lack of risk, taken for granted on the demo, can play a cruel joke with the trader. The illusion of simplicity often pushes a person to hasty actions. We really want to skip the demo, this most important preparatory stage, and immediately start earning.

Trading terminals and mobile applications are now intuitive, and a schoolboy will understand them without any problems. And after a couple of days of training on the demo, a person already thinks of himself as a professional who is ready to rush into real stock trading, but…

Don’t forget: “The beginning is half of everything”.

The demo is this beginning, the first step into the world of professional trading. Like training before a competition or studying at school before going to university. No professional athlete in his right mind would call training nonsense – because competitions only sum up long training sessions. And it is difficult for someone who trained carelessly to count on a prize place (making a profit on the market).

The skills and experience necessary for stable profit – making should be sought precisely at these market trainings. And take them seriously, although it resembles a demo computer game: installed, played, tried, switched to real. Not hurry.

The importance of this stage cannot be overestimated, because working on demo builds your trading skills. If you get used to sloppily, without careful preliminary analysis, opening and closing transactions – drag this ruinous habit to a real account. You will get used to moving stop-loss, obeying momentary whims – you will move them on a full-fledged trading account. You will begin to close profitable trades at the slightest price pullbacks – in the same way you will stop the flow of profit on a real deposit. You will look at the growing losses without killing them at the very beginning, you will get used to it, and with a high degree of probability – in the future it will ruin you.

Do you need it?

Therefore, trading on demo should be treated as seriously as on real. Conduct a full-fledged fundamental and technical analysis of the selected financial instrument. Keep a trading diary. Do not be lazy to perform calculations and current records (lot size, number of open orders, stop-loss and take-profit settings, etc.). Fighting for every virtual cent on your demo account is an essential skill that will help you out more than once.

In trading, as in most other processes, haste is not appropriate. The case needs to be given time to ripen and bear fruit. As Warren Buffett says:

Even if you are very talented and make great efforts, some results just take time: you won’t get a baby in a month, even if you get nine women pregnant.

And if your results on the demo leave much to be desired, it’s just too early for you to switch to real account, no matter how much you would like it. It will take as long as it takes. If you come to stable profitability on the demo in three years, then that’s exactly what you need. In five years, that means in five years. This is better than rushing into the real market in a week, absolutely not ready.

And just give the broker your money.

The correct sequence of professional growth:

Demo account (100% profit with a drawdown of no more than 30%)

Cent account (similar benchmarks)

Real account of $1000 or more (without restrictions on the result)

If you “stumbled” at a certain stage, go back. For example, you did not cope with the cent account, practice again on the demo. And don’t set any deadlines: “in a month I have to” or “by the end of the year I plan to earn so much and buy this and that.” The market is not going anywhere from you. The market will be in its place tomorrow, and the day after tomorrow, in a year and in ten years. Whether you will be in the market with money by then is a question.

To sum up: trading on demo should be treated as seriously as if your real money was at stake. Moreover, there is absolutely no difference in appearance. The same trading terminal, price movement charts, financial instruments, stock quotes changing every second. And the same numbers in the columns “Balance” and “Profit”, depending only on you. The whole difference is in our heads. Therefore, calmly, without haste, with pleasure – learn to make money.