Friday, September 27, 2013

Avoid Forex Demo Accounts

Today I want to take a moment and discuss one of the biggest myths in forex trading. On countless conferences I come across people who started to dabble in the world of forex and they seek advice. Unfortunately most of the advice you can get about trading in general is absolute bullshit.

Every time I hear someone mention demo accounts I can’t help myself and laugh. Those who think they can learn how to trade in a demo account are on the wrong track. A demo account is very misleading and will give you false confidence. A lot of shady bucket-shop brokers bank on this and the more a broker pushes their demo accounts where you can practice for free with $100K the further away you should move from them.

A demo account is not the O and A of forex trading. In case you are scared to trade and feel you are safe and secure in a demo account, find something else to do as financial markets are not some joke for you tell others. Trading may be the hardest profession to master and if you are scared, leave!

How many people have you met who had some ridiculous great performance over a multi-month period in their demo accounts only to go live and blow their accounts faster than they can realize what happened?

The reason is that they will follow the myth that they are trading in a demo account and they do not face two of the biggest hurdles which are emotions and psychology. When I hear some newbie retard make the claim that a demo is just like a real account and the only difference is that you are not exposed to the psychology of trading I am amused.

See, it is this little thing called trading psychology topped with an unhealthy mix of emotions which cause traders to fail. The only way you can learn how to trade is by trading and you do not trade in a demo account. No money is involved and you never place a single trade which means you can’t learn how to trade.

You can only learn by falling down which in the financial world means you will need to lose some of your trading capital in order to advance. There is no way around that. So, open a micro-account and fund it with up to $500. Don’t trade more than 0.01 lots until you learn how to trade. You may end up blowing it all, but rather than to complain about it view it as an investment into your trading career.

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