Demo-trading is usually seen as a way to verify your knowledge before you start using real money. However, you will never be able to ”translate” a successful demo-trading to trading with real money. The reason is simple. If there is no money on the line eliminates one of the most important variables that affect your trading decisions: the psychological pressure of risking your own money! Too long demo trading can be dangerous for your overall development as a trader; There are three main reasons for it:
1) Your handelsmisstag has no effect – then you will certainly not learn from your mistakes. Even worse, if you just say ”Oh, it was just a demo, I would never do with my real money”. So, what is the meaning of trading demo in the first place then?
2) The main reason that traders do not earn money is that they allow losses to ”run”. This effect is, however, only because of the money involved. Usually lowering or with the taking of the stop loss order completely to stop the losses. On the other hand, when traders see that their trade is in profit, they wont close winning trades too early.
3) Demo-trading can create negative and bad behaviour. When you demo-trade for too long, you will transfer this behavior to trade with real money. It is very difficult to break their habits.
How to use demo-trading on the right way
Demo trading is a complete waste, but you have to know what it is and how to use it. Some believe that demohandel is a great way to get a sense of how ”trade works”. You can familiarize yourself with your platform; Try all the different tools and buttons, without damage to your account. Try different tools, indicators or settings, see how they behave, place a few exempelaffärer, see how customization for positionsstorlek works and observe what happens on the charts during a trading day.
You can use a demo account in order to monitor the price and wait until you get a signal, then you go over to your real account, enter the parameters and execute your trade. Then you close your real platform, and go back to your demo platform. The reason for this is that most of the traders are losing when they look at their business in real time and see their account balance go up and down with each click. You will be more inclined to give up when you actually look at it. By separating the execution from the charting to create a more objective view of your trading.