Hello, I have no trading experience and have just finished reading all the information in the babypips school.
Before I even open a demo account I would like to develop trading systems and backtest them until I find one that suits me and works well.
Does anyone have recommendations for good software when it comes to back testing and reviewing historical charts? Online I’ve only manged to find daily line charts. I am looking for candle sticks for all the different time frames where indicators can be applied. Do brokers usually provide these historical charts?
Also, If anyone has any good tips for a newbie on backtesting or just developing trading systems in general it would be much appreciated.
I would advise you against a demo account as it is one of the worst things that can happen to a new trader. I know the criticism the majority may respond to this, but the majority fail to become successful traders.
You do not trade in demo accounts. So how can you learn how to trade when you do not trade? I suggest that you open a live account, a micro-account (some refer to it as a cent account) and fund it with $100 (more or less up to you). Only trade 0.01 lots. Learn how to trade now and if you can’t bare the thought of investing $100 in your trading then I have bad news for you. Most will recommend that you should go with a demo account, but keep in mind that most fail as traders. I have been trading for a living for almost a decade now and I have seen plenty of traders come and go.
Go ahead and mess around with demo accounts if you feel like doing it, I am 98% sure you will fail once you go live and very confident to state that you will never make it with the approach you favor, the approach 98% favor. Yes, I could be wrong and I understand the criticism out there with my advice. I guess it is up to you to decide of you want to be the 98% or the 2%.
Before everyone rips this response into pieces: I do not say that demo account will lead to 100% failure in live accounts and that if you go live from the start you are guaranteed to make it. However I do state that you will not learn how to trade in a demo account as there is no trading that takes place in demo account. It is like masturbating and thinking you are getting good at having sex. Best comparison I can give you.
I don’t quite understand what you mean. What do you mean you dont trade in a demo account? You’re saying because it’s fake money that it’s not actually trading?
I understand that it is different when you have real money on the line but whether I am trading with fake money or have 100 bucks on the line I’m still not going to care if I lose it.
So you’re saying to start an account with a small amount of money that I will sorta care if I lose because of the psychological effects real trading has over demo trading?
Btw i’m not ripping you. I might actually take your advice. I’m just trying to make sure i completely understand what youre saying.
Trading means that you buy or sell assets with the main objective of generating profits while being aware that you may face a loss. In a demo account you do not do that as you do not buy or sell anything. You waste your time. I would suggest that you open a real account yes and I would also recommend that you do not approach it with this ‘I do not care if I lose $100’ attitude. Learn to manage a small account and treat it as if it was a big account. Generate constant weekly profits for 12 weeks in a row. You can put more int the live account, I used $100 as an example. Either way you should care about the account because if you fail at managing a small account you will sure fail at managing a big account.
Do not underestimate the psychology of trading as it may be the most important task to master. In case you still do not care about the $100, attach requirements to it. You want to fund it more and care? Set yourself a goal and reach it, until you wont do so do not fund it further.
Let’s assume that you have a strategy you like to try and your goal is to earn 100 pips per trade (Again, just a number to have here). Accomplish that on a constant base with your micro account where you have only $100. Once you do so, fund your account with more capital, increase the volume and you are good to go.
You need to be patient here, but you need to chose the smart approach. That is my opinion and it is up to you which group you aspire to end up in.
Do you think it would be a good idea to start a demo just to get used to the platform and test my trading strategy and then open up a small live account to experience the psychological effects of trading? Or would this just be a waste of time?
I have been looking more into the debate about starting with demo vs live and you are not the only person that holds this view. I have also seen several people talk about how they did very well in the demo and then went live and blew it all with a small amount of time.
Yes, a lot of people do great in demo accounts and fail in live accounts. I found myself where you are about six months ago and I opted for live instead of demo. I think it was one of my best newbie decision.
Yes, because you cant test your strategy in a demo account. I am still learning. I do it in a micro account and only trade 0.01 lots as I finalize my strategy and yes I do lose which is normal as you learn how to trade. My losses have slowed down and I am working on my strategy.
My personal opinion is that it would be a waste of time. You can check out a platform in live and the only thing you will learn is how to place an order. A demo account is not needed for that. Now, if you feel more comfortable with doing that in a demo account then by all means do so.
I can relate to all this. I didn’t bother with demo & went live & it was a good decision. I only started with a few hundred £ & as I used good money management, I wasn’t particularly fussed by any losses so god knows how care free I would have been with fake mon£y on a demo account.
I wasn’t the most disciplined when I went live & just traded when I shouldn’t have, as a loss is just a minuscule amount that didn’t effect me. I won trades when I followed a plan & lost when I just jumped the gun & got in to the market. I have since put in another good few hundred in my account & I find myself a lot more disciplined as I really notice a loss so I focus more on my analysis & really pick my trades.
Only trade with what you could afford to lose (obviously in the event of you blowing the whole account), but also trade an amount that the 2% risk (if that’s what you use) is a noticeable amount. By all means, start with £100 until you get the hang of your platform but up that as you get comfortable. Losing £2 is nothing psychologically but losing £15 in a trade is a bit more noticeable (imagine what full-time traders are losing per trade).
I’m prepared to lose my whole account in the name of learning, as this is just my learning capital, it’s not the mon£y that I’ll use to trade - once I’m happy with my system & ability, I’ll invest a lot more. So again, only trade what you can afford to lose.
These are just my opinions & you are entitled to your own, but a £100 account will benefit you more than a demo account & lets face it, most people can afford to lose £100 & if you can’t, then Forex may not be the best path. Regardless of the amount you use, good mon£y management is essential & if you have a decent risk/reward ratio, any money you do trade should last you quite some time.
I’ve pretty much decided to start out live instead of going the demo route. I was originally planning on going demo and then starting an account with 10k usd once I got confident but instead im going to start live with about 200 usd and add more as I get better. I won’t be that upset if I lose 200 bucks but I would be if I lost 10k haha.
That is the right way to approach trading, I did something similar. I can only agree and I am glad that I am no longer the lone wolf here with this advise. It is the only way to truly learn how to trade and those who can’t afford to invest a few hundred in their own education they should not start trading to begin with.
I think you made the right decision. In case you need any help along the way I would be glad to help you. PM me with your e-mail address and we can connect. I do enjoy helping traders who make the right decision and are serious about trading.
You’re not a lone wolf, I’m sure that there’s many that agree with us. Demo is fine for a proper utterly clueless newbie but once you know what trading is & what you are doing, real money is the only way to go.
Going live is the best decision, you won’t regret it - and if I’m right about that, remember to back-up me & The Last Bear next time we try telling someone that. With good mon£y management & a 1:2 risk/reward ratio, anything above a 33.3% win percentage will result in profit so your initial deposit should allow you to get a considerable amount of experience & with a bit if luck, you won’t blow that account.
And “upset” would be a wee bit of an understatement if I blew 10k so yeah, your idea of going for $200 is good. Make a rule that if you finish a month in profit, you add another $100 & then if you have 3 consecutive profitable months, you add even more. I think that way the psychology of trading larger amounts slowly builds rather than jumping from a profitable $200 account to a scary daunting 10k account. Just a thought.
I may not be able to teach folk how to be profitable but this generic stuff, I own it
