Making the jump from a demo account to a live forex trading account is a big deal – after all, this is the first time you’ll be utilising your market knowledge and demo account experience to trade with actual capital. With money on the line, this isn’t a decision that should be made in a hurry – there are a few things you need to consider before making the move.
If you’re confident you understand all of the vital fundamentals of how to trade forex, are you ready for a live market environment? Let’s find out by looking at 4 telltale signs it’s time to move to a live forex trading account…
You’re confident in your strategy
Hopefully, you’ve been spending your time trading on demo accounts to establish and refine your own forex strategy. With so many different approaches to take, it’s important you use trial and error during this time to figure out what works for you (and what doesn’t!) without having to part with any cash. If you’ve done this, you may be ready to take your strategies to the live market.
Being familiar with the platform you’re using is also key to ensuring you don’t get overwhelmed when making cash-backed trades. You should feel confident in how to navigate your chosen platform, understanding the charts and indicators displayed and, most importantly, knowing how to quickly enter and exit your trades. If you can check all these aspects off your list, it may be time to consider moving to a live account.
You’re competently practising risk management
Undoubtedly, one of the essential skills to build when you learn to trade forex is risk management – after all, on such a volatile market, big losses can be just as common as big wins. As such, you’ll want to ensure you’re regularly practising risk management strategies with ease, as this could make all the difference to your profitability when moving to a live environment.
When the market isn’t working in your favour (a common occurrence in forex trading for beginners and veterans alike), it can be tempting to begin questioning your strategy, parting from what’s served you well in favour of reactive, emotive trading.
Of course, the danger here is that your strategy is no longer backed by theory and experience, leaving you susceptible to bigger losses than you were originally being exposed to. Not only that, but it can be common in these types of situations to begin risking more money than you’re comfortable to lose, which can have major financial repercussions when not working in your favour.
So, if you’ve found yourself staking more hypothetical pips on a demo market to recoup losses or amend downward trends, take this as a red flag that you may not be ready to make the jump to a live account just yet.
You understand how to take losses
Tying in closely with point #2, losses are unfortunately an inevitable part of forex trading. As such, knowing how to take losses is key – both in terms of your physical actions and your mental state of mind.
The more experience you have trading demo accounts, the more exposure you’ll give yourself to losing trades. As a result, be sure not to rush into live forex trading after practising just a few trades. Instead, expose yourself to failed trades and utilise the experience to learn how to take those losses.
For example, an inexperienced forex trader may try and recoup the losses straight away, committing the cardinal sins discussed in point #2 and causing further financial damage as a result. On the contrary, a sensible forex trader will know to step away from the market following a loss, instead taking that time to study their trading journal to learn from where they went wrong. If you’re the latter, you may be ready for a live environment – as long as exposing yourself to losses hasn’t been too much of a regular occurrence in your demo trading!
You’re experiencing consistent profits
On that note, our last sign that you’re ready to make the move is an obvious one – you’re seeing consistent wins with your demo trades.
It may go without saying, but, if you’re regularly making trades backed by theory and data that are consistently returning profit, you’re clearly doing something right. Utilise data from your demo account such as total trade amounts and win-loss ratio to gain a realistic picture of how you’d fare in a live market environment and, if it looks positive, it may be time to take the plunge.
Of course, it’s still vital you feel confident in your ability before doing so, though. If you have a strong win-loss ratio but you’re not sure you have enough market comprehension to know why this is the case, you should hold off on opening a live account. It’s all about when the timing feels right for you and you alone.
If you’ve finished reading this and feel like you’re ready to begin live forex trading or, alternatively, it’s made you realise you need to learn more about forex trading, we want to hear from you. We have a library of forex trading tips, tricks and advice for all abilities, so get in touch to discover how Learn to Trade can help you on your forex journey.