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Meet Ralph.

He’s fiddled with demo trading for two weeks and decided that it’s time to put real money on the line. After setting up his very own live account with a broker, Ralph opens the platform right away to input his very first trade.

“It can’t be that difficult. All I have to do is find a trade setup, click a few buttons here and there, and I’ll raking in the dough! I can picture myself now living the life of a superstar Forex trader: making piles of cash and cruising down Sunset Boulevard in my brand new Ferrari, with Scarlett Johansson looking hotter than the devil’s underpants in the passenger seat! This is ain’t gonna be no thing but a chicken wing!”

Upon entering his trade, Ralph’s account shows a tiny loss, probably just because of that nasty pip spread. After a while, price starts moving against the direction of Ralph’s trade and he’s starting to feel a bit on edge. Negative 15 pips… 20… 25… A few more candles later, his palms start to get sweaty as he sees his account go deeper in the red. Before he knows it, his trade gets automatically closed by his broker on account of a margin call.

Believe it or not, this happens to a lot of traders who aren’t quite ready to make that jump from demo to live. They decide that they’ve had enough playing around with toy money and feel they’re ready for the real McCoy. But once they go live, they forget everything they learned that made them profitable on demo trading.

So, before you retire your demo account and see your account in flames, I have a nice little trading experience check list you must be able to answer an unequivocal, resounding, and decisive “YES!”:

  • Have you tried trading different time frames?
  • Have you experimented with trading different styles?
  • Have you been trading on a regular basis for six months or longer?
  • Can you properly rationalize each trade you take?
  • Are your winning trades outweighing your losing trades over a long term?
  • Do you have a process for recording and reviewing your trades to improve performance?
  • Have you made adjustments in your trading system after becoming discontent with the outcome?
  • Are your winning trades outweighing your losing trades over a long term?

And this leads us the most important question of all,

Have you developed a trading plan and process that works for YOU?

If you are leaning more towards “No” or a feeble “I think so,” you may want to reconsider going live. If you’re already trading with a live account but you’re feeling the heat after a couple of losses here and there, maybe you should take a step back and reevaluate. After all, there’s no shame in staying in demo trading first.

Demo trading is all part of the process – it’s there to help us become the traders we want to be without risking a dime. It’s there to help practice proper discipline and strict risk management rules. Most importantly, demo trading helps provide the needed experience in different market environments for each trader to find his trading niche.

By the way, we wanna hear how long you were in demo and how you knew you were ready for live trading…please post your experience in the comment box below!