2. The Amount at Risk Is Above Your Comfort Level
Happy Friday! Gets it out of my system and I can watch it and hopefully learn from it.
However, my demo account is growing, and my live account is dropping… FAST! How would you recommend making that connection? Making the switch from demo earnings from a demo account to a real money account is a big step and is often not without challenges.
One of two dilemmas tends to arise when making the transition from a demo account to a real money account. The good news is there are a few potential solutions. Both refer to the use of your money versus trading fake money in a demo account. What is risk capital?
How to Seamlessly Transition From Demo Trading to Real Money
So if you plan on trading your rent money, you may want to rethink your approach. The same goes for any money you need for food, utilities or any other costs required to live your life.
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Also included in this list is cash from credit cards. I realize some cards let you take out cash advances. And although U. All of the above leads to one inevitable outcome… Your emotions are likely to get the best of you. Trading Forex successfully is hard enough as it is.
Now, think about the statement you just wrote. Read it out loud if you have to.
Just keep cutting your risk in half until you get your confidence back. Once you get it back, you can begin to normalize your risk per trade.
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Your trade plan, on the other hand, is how you intend to win the battle. Your trading plan should include things like the strategies you utilize, the time frames you trade and your minimum risk to reward ratio, among other things. Your trade plan will be specific to the setup at hand.
It should include things like your stop loss and take profit values as well as other key levels that could become a factor.
It all goes back to money and emotions. So you have to earnings from a demo account for every possible outcome. For instance, the questions below are just a few you should be asking.
What are my stop loss and take profit levels?
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How much am I risking and am I comfortable losing the entire amount? Is there any news coming up that could affect my trade? These are all things you need to account for before you put money at risk. Because once money is on the line, it becomes much harder to differentiate the facts from your emotions.
You see, many traders think that the balance of a demo account is inconsequential. What does that have to do with performance? A lot, in fact!