So, you have been trading on a demo account for a few months now to see if you’d be able to make it in the online trading world. You want to move from trading on a demo account to trading with real money alongside the real experts of the trade. But how will you know if you are ready for this big step? According to a senior financial analyst at Wilkins Finance, the following items need to be checked off your list before you start live trading:
Are you making more profits than losses?
There is not a trader in this world that can say he or she has never made a trade that was unsuccessful. If you make a trade that puts you back a few dollars, do not fret but make sure you are able to make that money back with your next trade. You need to be consistent when making profitable trades and if you do, you can add a tick next to this box and get ready to start live trading.
How would you rate you risk-management skills?
When the market is volatile, you might doubt the decisions you have made about your trades. If you have a set of rules when it comes to risk management and you keep by that rules no matter what, you are ready to trade live. You need to remember that your risk management skills are there to help you protect your money and help you make the correct decisions, no matter what the market looks like. After all, if half of the world’s traders jump off a bridge, would you do it too or stay where you are as your risk management is of a great standard?
Are you still emotional when you lose on a trade?
It’s very difficult to set your emotions aside when it comes to losing your hard-earned money on a trade going sour. But if you are a trader, you need to have thick skin. If you are demo trading and lose control when your trade goes wrong, you need to reconsider the fact that you want to move to live trading. If you can keep your emotions in check, you can move to live trading.
Do you still take losses very hard?
If you have lost the money you used for making a trade, you need to take a step back and evaluate the situation. You need to ask yourself the following questions: What went wrong with this trade? How can I use this trade to better develop my trading strategy to give me a fighting chance with my next trade? If you are able to answer these questions and make your lost profit a way to impact your trading strategy in a positive way, you have another reason to move from demo trading to live trading.
Do you have a broker and trading platform you are comfortable with?
When choosing an online trading platform, you need to know the ins and outs of it, especially what fees you will be paying for each trade you make. You need to be comfortable with the tools the online platform has to offer. You also need to have a broker you feel comfortable with calling when you need some assistance with your brokerage account. As your money will be used on this platform and your broker will keep your money safe, it can become quite daunting to know that you will suddenly move from working with demo money to working with your own cold, hard cash. If you are peaceful about your broker and online trading platform, you can move ahead and start trading with a live account.
You need to take into account that even though you have aced all the above-mentioned pointers and know how to trade, trading is all about experience and developing a solid trading strategy. Therefore, do not move from demo trading to live trading until you are confident in yourself and your ability to take the marathon of live trading as it is certainly not for the faint-hearted of people!