Live trading will teach you more than demo trading
I am in favor of people opening demo accounts in order to practice the options trading strategy, which they liked and showed results. However, I interviewed about 5000 people, visitors to our portal, and it turned out that people are stuck on their demo accounts for too long. They make money on verbal money, they gain significant experience and time sitting in front of the screen. But as soon as they start trading on a real account with real money, they quickly lose their money. In this article, we will give you some idea of why this happens, how to avoid it, which may help to avoid such a situation.
Demo trading binary options, of course, is the place to be, don’t get me wrong. But at the end of the day, if you don’t try, you’ll never develop the necessary mental skills that are needed to be successful in the market. Just as a pilot cannot live his life in a flight stimulator, and a doctor cannot always stay in the laboratory, in the same way, a trader cannot stay too long on a demo account if he wants to be successful in real trading.
A demo account is different from a real account
Demo accounts are just a simulation, in other words, they are not real and they do not duplicate exactly the conditions of live trading (this is obvious, because that’s why they are called demo accounts). More specifically, a demo account often has an excellent price, filling orders, stopping when reaching a level, etc. You’ll never get the perfect experience you’ll get on a real account.
So, what does this mean specifically for you? Quite simply, this means that demo trading binary options will not teach you as much as real trading would. And if your goal is to trade with constant success, earning real money, then you need to start doing real trading on a real account without wasting time. Once you have learned an effective trading strategy, in order to switch to real trading, you need to practice on a demo account for a maximum of a month or three.
Important note: if I say that you should try and try trading with real money, after a month or three training sessions on a demo account, this does NOT mean that you need to risk a significant amount of money at the same time, even if you are at risk. I STRONGLY recommend that you relax during real trading and not worry too much whether you will earn or not. And you can afford this only if you bet the amount that really does not seem so significant to you to worry about it. Especially if this is your first real money trade. It is imperative that you trade for small amounts, as you first need to familiarize yourself with the broker’s trading platform, how it works in the case of a real account as opposed to another virtual binary trading account, and much more.
Finally, as you gain experience and gain confidence in trading small amounts, you can increase the degree of risk per trade to an amount that matches your trading capabilities and confidence about risks. It is also important to note that this risk, dollar-on-trade, will vary significantly depending on the type of trader, there is no simple unambiguous risk management system that will work perfectly for every trader, regardless of what you may read on other sites. That is why I propose to measure risks in dollars, not percentages or units; Since this is what gives you the opportunity to very personally and individually determine how much you personally feel comfortable with if you suddenly lose it in a certain trade.
At a certain stage, you will force yourself to move to a real account, you will not trade on a demo forever. Don’t train on fake samples. After convincing yourself that you are comfortable on the demo, moving to a real account, where your productivity drops like a stone from a mountain, is not the most productive or reasonable way to resolve the issue. This defines the question I’m going to answer in the next section: why do people do well on the demo, but then start losing money on a real options account?
Fake confidence?
As we’ve mentioned before, demo accounts don’t function in the same way as real accounts, and they certainly won’t create real mental trading skills the way a real account does.
The main reason that traders have significantly more success on a demo account than after they switch to a real account is simply that they do not have emotions on the demo that affect their judgment when making decisions regarding trades… Since she simply does not have emotions.
When it comes to a demo account, there is no attachment to money, even if you open a demo with the same amount that you plan to spend during real trading, even if you stick to the trading plan exactly, it will still not be the same. Traders often complain that their hands sweat and their hearts beat like crazy when they trade on a real account for the first time. This is because a situation of stress begins and their mental and physical state changes. People don’t always realize that the main reason for this is banknotes, real banknotes, as opposed to a demo account. Some things that don’t have consequences on a demo account include:
• Replenishment of a bet on a position that defies any logical explanation. That’s something you would never do on a real account.
• Developing confidence and ability in partially the wrong conditions.
When you trade with real money, you feel emotional ups and downs, and when you trade on a demo account, there are no such ups and downs. Thus, the ability and confidence that you develop when trading on a demo account will not necessarily be needed on a real account. Moreover, they are more likely to interfere with you.
There is a tendency for traders to switch to trading on a real account with false confidence and a high level of hopes built on demo trading, this can lead to the fact that they will immediately start losing money on a real account, as they do not fully understand the risks, since there was no real risk on the demo account. .
And the sooner you switch to a real account, the better for you, since you will not be loaded with unnecessary information, you will start small, build up momentum, then you will slowly understand more and more how the real world of trading works.
A new player in a professional team always starts hard, and he goes back to training, but then he doesn’t have a chance to participate in the team again. How will he feel in a real game? No way, he simply will never play there if he does not just leave training and start practicing in a real game.
A doctor will never get a real experience if he does not operate on the patient for real. If the doctor makes a mistake, he or she will go back to learning, but if the doctor does not go back to the real patients, then he or she will never get a sense of reality again.
How to get started on a real trading account
If you’re playing poker for fun, not for money, you’ll feel and think differently than if you’re playing for money, like $500. The same thing happens in the case of trading; You think and feel trading on a demo account differently if you were trading on a real account. And, just because you’re really good on a demo account doesn’t necessarily mean you’ll be as good when it comes to the money you’ve earned. Everything you learn on a demo account won’t matter if you don’t trade on a real account in the same way you traded on a demo account. It is clear that the transition from a demo account to a real account is important, since you will have to do it earlier or later, but before you start trading live, you need to take into account some important things.
No matter how ironic it may sound, but the key to the success of trading on a real account, if you were good on a demo, is to recreate the same mental state as on a demo account. And so far, I do not believe that it is 100% possible to be completely detached during real trading, as it happens during trading on a demo account. But, at least, it is possible to get as close to that state as possible.
How to alleviate the influence of emotions on live trading…
• Start small and increase your investment amounts only after you have gained the necessary experience of trading in the real world on a real account, when your experience curve begins to rise. Even starting with a low level of risk will help you get the feeling and skills that are necessary in order to start trading on a real account, you do not need to jump over jump immediately into high-risk adventures, as you did on a demo account! Don’t increase your investment too quickly! This is a huge mistake that most traders make.
• Accept the fact that losses are part of trading, learn how to deal with financial losses with the help of appropriate financial management. The fact that you lose on trading will not reach you until you start trading on a real account, since you do not feel losses on a demo account.
• Learn and start practicing first on simple trading methods – I offer the method of price action considered in my course. But whichever method you choose, make sure you can confidently say that you feel you know it inside and out before you experience it in real trading. Do not just experiment with it, you just need to use demo accounts for one to three months, as mentioned earlier, but no more, since by doing so you are doing yourself a disservice. Sooner or later, you will have to make a decision to switch to a real account and start “swimming”, because if you do not learn this, you will not be in those places where big fish live, you will never be afloat, as they say, in the ocean of real trading.
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Tagged with: Binary Options Demo Account • The Psychology of Binary Options Trading
