Recently I explored a lot of websites and forums orientated towards Forex traders and I realized that the most of the beginners (especially in India) think that if they “trade” on Demo Account for several months they will learn how to analyze the market and they will gain experience. And what happens? In the end when these “Demo Traders” put(eventually) their money counting on their “Forex experience” most of them loose everything in a short period of time.
Now I will tell you what I know about Demo Account:
For the Forex Brokers this is a tool to seduce people who are afraid of the risk in Forex market.
For the Forex Traders this is a tool to understand how reliable the platform is and to get used to it.
For the Demo Traders this is waste of time.
If you think that analysis is everything you are totally wrong! Yes, it is important, but you can find more important things. If you put 4 year old kid on the PC it will have approximately 50% success in its predictions. A grown up can do much better if he dedicate just a little bit time to learn. But 95% of the people who invest on Forex loose their investment. Of course this is because of bad Money Management.
But how can you learn how to manage your real money when you are trading with virtual money? The simulation of the market is almost the same as with real money, however your emotions are not the same – you loose 10 000$ on Demo Account and you don’t care, you just open another position with leverage 100 and take the 10 000$ back – It is so easy to trade on Forex… And then you finally decide to open a real account – it is great. You have read an article for Money Management and you decide to trade at low risk. And it works – you make 20% profit in the first week. And you become involved with the trading, you overestimate yourself and you start trading with bigger lots so when the price hits your stop loss level it is just like Mike Tyson hits your head – Knock Out in the first Round.
So dear Demo Traders, I recommend you to open live account! Of course with smaller amount – I am aware that you are afraid to loose! But this is the truth…no pain – no gain! I guarantee that your first position closed on loss will show you that I am totally right! You will feel demotivated, you will loose confidence and you will consider to stop with this Risky Forex Market – unfamiliar feelings for you till that moment. And when you start getting over this feelings – this is the point where you can say the words “I have experience!”
