In my course Forex Trading: Your Complete Guide to Get Started Like a Pro, I suggest to start your Forex Trading adventure with a demo account.
A question that I usually get is: “when do you think that I can open a live trading account?”.
I’m always happy when I get this question, because it means that you understand that it is an important transition. Most traders think that it is just a matter of money: if you are profitable, you can open a live trading account; if you are still struggling to make money, you better stick to your demo account.
This is correct but there are other things to consider… let’s start with the first one.
1. You CONSTANTLY make money.
Now, with this I don’t want to say that you need to win all the trades, this is impossible in my opinion. I mean that you should try to keep growing your account month by month. I personally like to compare my account balance to the account balance of 60 days ago. If the current balance is higher, everything is ok; if the current balance is lower, then it’s time to ask ourselves a couple of questions.
Remember: you don’t need to win every single day or every single week.
2. You remain cool when you lose some trades.
Why is it important to remain calm after losing a trade? In my course I have talked about something called “revenge trade” and over-trading. Revenge trade is when you open a trade just because you want to recover a loss of a previous trade. Over-trading is when you open too many trades. This usually happens because you are never satisfied of the results: if you are losing, you want to recover your losses; if you are winning, you want to win more.
Discipline is a must in Forex Trading. It is the most important trait of a Forex Trader. If you don’t accept that you can lose from time to time and you are not cool with it, it is better to continue with your demo account, because switching to a real account can only worsen your problem.
3. You have solid Money Management rules and you always follow them.
I can’t stress this enough: Money Management is essential for your success.
Do you think that Money Management rules are important only to avoid to blow up your account?
Take a look at this article: Kelly Criterion: How can I maximize my Profits in Forex Trading.
4. You feel comfortable with your broker.
Is the spread acceptable? Are the trades immediately executed? Is the platform easy to use? Is the broker keeping the same conditions with a live trading account? Have you checked all the regulations and is your money secure?
Do you know Michael Schumacher? He used to be a Formula 1 driver, one of the best in my opinion. Let’s say that if Forex Trading was a car race, he would have been ready for a live account! But what if you gave him a Toyota instead of his Ferrari? Probably he wouldn’t have got the same results.
As a Forex Trader, you already have many things to care about; your broker and your trading platform shouldn’t be in this list.
“Success is all about persistence and doing the right thing for the long term.”
I know that you can’t wait to trade with real money, but in every career, there are steps to follow. The transition from step 1 (demo account) to step 2 (real account) is very important and you need to do it right.
If you rush from step 1 to step 2, it is likely that at one point you will come back to step 1, wasting your time (and your money).