I started paper trading with a demo account before I came here trying to figure things out.
One trade I remember I was in a deficit of $5,000 but I just told myself not to close the trade and the money wouldn’t be deducted. AUD/USD rose and I made $1,200.00 on the upside. I was on a demo account so I was trading with a $50,000.00 account.
My question is if I have a $2,000 dollar account and I went in a deficit as I did above to more than I had in my account, would my trade automatically be closed automatically?
Your broker should trigger the free margin level to cut your trade before you reached it. But more to the point - why would you be risking 10% per trade, when pro traders would deem 2% as maximum for any one trade, and a set a maximum daily risk per day.
If you don’t want to burn a £2,000 account quickly, don’t gamble it away. Your example is proof that one bad trade would wipe your account clean.
Also, why not adjust your demo account size down to what you’d actually be trading once you went live? That makes a bit more closer to what you’d experience in the real world. Would you open a $50K live account? If not, then why practice on one? Get your demo as close to real world as possible.
Also, how long did you keep that $5k trade open? Just wondering.