How to take demo trading "Seriously"

Beginner Questions
1

Hi all,

Having recently blown out a small live account I’m now strickly on demo and taking it very seriously.

I made the classic mistake of jumping to live trading when I wasn’t ready. I found that having a live account with real money in it I just couldn’t take demoing seriously enough as there was no ‘real money on the line’.

Well now I’m back on demo and I’m finding any kind of loss very painful and taking it very seriously indeed.

The basic requirements for the trading method I’m learning (which I ignored last time round as I thought it would be different for me) it is recommended that you demo trade until you are profitable for 3 months in a row. If you cannot do that then you keep demoing until you can. After that you trade a small amount of real money until you are profitable with real money for 3 months in a row - same rules apply. Only then can you trade with the amount of money you want to trade with.

3 months in a row - think about if you trade well for 2 months, then have a bad month - you have to start again - that makes 6 months demo - unless you have another unprofitable month and have to start again!

I’m treating this test like a bar exam for a lawyer or a final exam a doctor has to take before they can practice professionally. Or like a driving test where you cannot drive a car until you pass the test and if you fail you have to go back and retake.

So looking at the balance of my demo account and % gain/loss it’s a very big deal if that goes into the red.

People will tell you that demo is not the same as trading real money - so to do it properly and learn not just how to trade but [B]how to follow and stick to rules[/B] you have to make it the same.

Make it a goal that you [B]have to pass this test in order to progress to the next stage. [/B]

It’s working for me so far :slight_smile:

2

Going through the same thing… back to trading funny money again.

Taking the time to re-evaluate my trading plan, my methods and the markets I trade.

We all know that trading demo isn’t the same emotionally as the real thing but there is alot of benefit to following your trading plan and money management rules for a while and seeing how you do over many many demo trades. In particular I find it interesting how there are times when my system is in gear with the markets and my demo acct grows quickly… but at the same time… when your system is out of sync with the markets you can really take a serious string of losses.

For those who don’t like demo at all… a Mico account could be just the thing for you. Since betting 0.10c a pip doesn’t amount to much for alot of people.

LL

3

Emptying a small micro account is the best medicine for taking demo trading seriously.

I speak from experience :wink:

4

Start again, as in open a new demo?

If that’s the case, you are WAY oversized on your position size.

One losing month should in no way wipe out 2 months profits, unless your position size is too ambitious, or your stop loss is out of line.

On the other hand, I can understand the logic on the winning six months in a row as a confidence builder, but the logic is flawed.
Say you win for six months in a row, jump to live, and the odds have caught up with your strat, and your first month live is a downer.

What is the protocol then?

I would suggest you take a good hard look at your losses when they happen.

Chances are there is an identifiable weakness in your strat somewhere that sets you up.

Look for the common elements in the losing trades.

Market ranging, or trending?

Were they different pairs than you normally trade?

Were consistently more of them long or short positions?

Were profitable before they changed direction? Or did you just flat out hang on to a loser too long, hoping it was going to come back for you?

You can often learn more from a losing trade than a winner in terms of where you went wrong.

Since you’ve toasted an account, your head will play hard with you when you go back live, I don’t care how successful your strat is.
You can avoid that by being so comfortable with your strategy, you can do it while sleepwalking.

Fear of losing is a powerful emotion, and can color your ability to make a clear decision.

For me, early on, hope and fear worked opposite than one would expect. When got in on a loser, I would HOPE it would come back, and hang on too long.

When I got in on a winner, I would FEAR I would lose the profit I had gained, and sell out far too early.

I’m sure you’ll get plenty more help:)

Cheers!

5

I guess I’m lucky then. Every demo trade felt like a heavy anvil on my back. Even losing Monopoly money made me day feel much worse.

6

Thanks for the reply. It’s not so much a losing month wiping out the profits of the previous ones it’s more a case of being in profit for 3 consecutive months. If one month is not profitable then the 3 month training period resets to the start.

Just the thought of that is making me trade a lot more carefully on my demo and losses hurt a lot.

8

If you can tripple your demo account twice, you are ready to trade. :wink: