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When To Trade With Real Money
When did the training wheels come off the bike? When does the parent let the new driver go solo? When can the new pilot fly solo? When does a trader start to use real money? The answer to these questions will be different for everyone.
One of the first things in each of these examples would be the level of confidence the participants have in themselves. With the bike rider, it might be when he/she does not touch the training wheels any more. With the student driver and pilot, it might be when they have passed some tests and practiced enough to be proficient in the operation of the car or plane. In trading it might be when the trader has more winning trades than losing trades in their demo accounts and knows how to operate the trading platform. Everyone progresses at a different pace and is ready to move on to the next level at different times.
These are the steps we recommend:
1. Learn how to use the trading platform
2. Learn the basics of a trading strategy
3. Practice simulated trading using the strategy
4. Practice demo trading
5. Practice visualization trading.
6. In the demo account there should be more winning trades than losing trades.
7. When the confidence is there move onto live trading.
The object is to be a good trader before you try to make a bunch of money. The money will come after you master the above steps on becoming a good trader. If a new trader tries to skip some steps in the learning process and has some success, then they were lucky. There is no short cut to learning how to trade well. The market does not care whether you make or lose money. The currency market has a way of keeping traders humble. It is always best to learn and follow some trading rules in becoming a good trader.
One of the first things in each of these examples would be the level of confidence the participants have in themselves. With the bike rider, it might be when he/she does not touch the training wheels any more. With the student driver and pilot, it might be when they have passed some tests and practiced enough to be proficient in the operation of the car or plane. In trading it might be when the trader has more winning trades than losing trades in their demo accounts and knows how to operate the trading platform. Everyone progresses at a different pace and is ready to move on to the next level at different times.
These are the steps we recommend:
1. Learn how to use the trading platform
2. Learn the basics of a trading strategy
3. Practice simulated trading using the strategy
4. Practice demo trading
5. Practice visualization trading.
6. In the demo account there should be more winning trades than losing trades.
7. When the confidence is there move onto live trading.
The object is to be a good trader before you try to make a bunch of money. The money will come after you master the above steps on becoming a good trader. If a new trader tries to skip some steps in the learning process and has some success, then they were lucky. There is no short cut to learning how to trade well. The market does not care whether you make or lose money. The currency market has a way of keeping traders humble. It is always best to learn and follow some trading rules in becoming a good trader.
Comment
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Comment by Jed Norwood on February 3, 2009 at 9:53pm -
Sometimes I think losing and account is part of a newbie's training. It weeds out those who want to trade and those who just are looking for another way to gamble. We should open a site called Lazy Newbie's Financial Security. We'll just tell them to give us half the money in their account and keep the rest, they'll come out ahead that way. If some one is really willing to study at the beginning and realize there are strategies and rules though they would do really well.
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Comment by Casey Stubbs on February 2, 2009 at 4:19pm -
Yes that is true, many traders jump into real money way to early. I was one of those, after I lost my account I went back to demo. Then I waited until I tripled my account before I got back in with real money.
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