How long have you been “studying” Forex trading?
But how many demo trades have you placed?
If you have not placed a single demo trade yet and you have been studying for more than a week, then stop what you are doing right now and read this post. I love getting emails from readers, but one of my biggest frustrations is how some people study for months and still have not placed as single demo trade.
I'm not saying that you should start trading with real money right away, in fact I strongly advise against it. But you should at least open a free demo account and start trading with play money.
I actually advise you open a demo account before you really even start learning anything.
In this post, I will go over why opening a demo account as soon as you can will help you actually progress and prevent you from being stuck in “learning mode” forever.
Placing a DemoTrade Will Answer These Questions
What is a Pip?
I could give you the academic answer, but that wouldn't do you any good. You can just place a demo trade and see how much play money you win or lose when the price of a currency pair fluctuates.
See the column that shows the number of pips gained and lost on your demo trade? Divide that by the dollar amount that you are up or down. That is your cost per pip.
Trust me, that is all you need to know. Please do not make it more complicated than that.
How Does Margin Work?
When you place a trade, you should be able to see how much margin you used. By doing some simple calculations, you should be able to figure out how much you can trade and still stay within your margin limits.
The bottom line is that if you are worrying about margin limits, you are probably trading too big or over trading. It is really hard to communicate this to anyone who has never actually placed a trade before.
How Much Money do I Need to Trade for a Living?
Just take a look at the balance in your demo account after six months. That will tell you what you need to trade for a living. If you are asking this question, then you don't need money…you need experience.
Go get some by trading a demo account. Then you can think about trading from the beach.
Which Broker Should I Use?
Read the reviews online and try out demo accounts with these brokers. This is the only way to get a good feel for their platform and their service.
If you have done your research for demo accounts, then you probably know about their live accounts too. This will help you make and educated decision when/if it is time to open a real account.
How Do I Know Which Trading Systems Really Work?
Trade it in a demo account and forward test it. If possible, back test it too.
Yes, that is the only way.
You need to find out if the system not only works, but it works with your personality. Two people can trade the exact same system and get totally different results.
It all comes down to having a system that works for the individual trader.
The Bottom Line
When it comes down to it, placing demo trades will teach you more about the mechanics of Forex trading, in a shorter amount of time, than any book.
Don't understand something? Look it up.
That will give you a practical education…information that you actually need, instead of studying the Gross Domestic Product of France for two weeks, which you will probably never use.
It doesn't matter what trading system you use. Just place some trades…it's play money anyway.
I believe in just getting started because you will never know what you really don't know, until you don't know it. So open a demo account now, it is free and it is not real money. Check out this handy chart from the folks at FXStreet, for finding the best demo broker.
It is mostly for US clients, but it gives you a good list of things to look for in a demo account. Can you guess who I trade with and why?
Don't get me wrong, I believe in getting as much education as possible. But a demo account is the right kind of education.
- Blow it out as many times as you want.
- Make all the mistakes you want.
- Start all over.
You have no more excuses, stop studying and do it now.
If you are not willing to do that, then guess what? You might not have what it takes to become a trader. I sincerely believe that trading is one of the best independent career opportunities in the world. I also believe that anyone who really puts their mind to it can do it.
However, I also know that the majority of people in the world do not have what it takes to become a trader. Since you found this tiny blog, then you are probably one of the select few has a good shot at making it.
Go open that demo account now.
Did you learn a lot more after you opened a demo account? What were the biggest lessons? Let us know in the comments below.