Hello, I’m Mike (Just remembering how BBcode works from the old days )
I’ve played with Forex demo accounts for a little while now while running a ‘normal’ business. Always liked the idea of making money without having to worry about taxes, accountants, leases etc.
A few years ago I decided to shut the business down, as I wanted to get married and try for a baby (it was a joint decision you’ll be relieved to know!) and I wanted to be a stay at home Dad.
Now our Daughter is 8 months old and I’ve put much more effort into trading demo. I’ve tried a few systems / techniques from scalping (loads of screens, loads of time in front of them) to trading the news.
I think I have a strategy worked out that gives me the time freedom I need (I like to do odd things like dry-age beef and smoke stuff, as well as cooking and cleaning). Trading on the daily charts I plan to identify trends / support / resistance and hop onto new movement. I’m good at reading charts and don’t really have much time for indicators apart from when the algos are using them!
I am about to go live with a real account (£10k) so am hoping to find a place to journalise my efforts if they go well, and be a cautionary tale if they go badly…
I haven’t gone live with £10k yet. Still on Demo with IG.
I understand there is differences - slippage etc - but my understanding is that all this should be minimised with my strategy (going for larger price movements with smaller lot size). The main reason I don’t like scalping is the broker side adjustment of spreads / stops etc. I’ve read so many accounts of people having bad experiences that way.
HI Mike. Nice having you here. Looking forward to reading your journal. A humble suggestion, if I may - deposit only 1k to begin with. If you can grow that amount consistently for 6 months then deposit additional funds over time.
You are right that there are “technical” differences such as slippage between demo and live trading, but the main difference that people are referring to here is the huge psychological difference when trading your real money compared with “play” money and how that leads to very different reactions in the trader.
It really makes no difference whether you add 10,000 or 1,000 equity to your account (unless you fear your broker will run off with it, in which case even one dollar is too much!). What actually matters is your position(s) risk exposure in dollar terms and not just a “percentage of equity”, which is a combination of position size and pip distance to your stop out level. And, if you intend taking multiple trades, this also includes taking into account pairs that are correlated and tend to move in similar directions.
But there is little point in placing with your broker more funds than necessary to comfortably cover your margin requirements (both initial and floating). You can add more as and when you increase your trading positions size.
Your overall acceptable open risk exposure should be defined beforehand in your money management parameters and you should be as disciplined with this as you are with your actual trade entry criteria. Remember, successful consistent trading is never about each single trade, it is about the overall outcome of a number of trades over a period of time. You will have losses, it is an inevitable part of trading probabilities - and it really does not matter, either, if they are controlled in their ratio to the gains.
And ensure your exit strategy is equally well- defined. This is one of the most critical points in optimising your strategy and yet one of the hardest to define and to comply with. It is a “head in the sand” policy to think like so many claim: That it is “never wrong to take a profit”. This is not true. If you frequently snatch profits prematurely then, whilst you might make some pips on the trade, you will also be destroying your overall profit/loss ratios on which the success of your strategy is based.
I also think you are probably right to look at longer term trading in your circumstances and by-pass the intraday jitters in the markets. But, on the other hand, there are benefits in day trading, too. But that is a question of personal choice really - you know best what suits both your circumstances and your personality.
I have opened a micro account funded with £200 and stuck the £10k in a savings account. My demo account is at £12k from an initial £10k and have never traded it as free money - more that the bottom line is an indicator of success… so I hope that the psychology is in line.
Agree with you, demo just makes us aware about the basic ‘what and how’ of forex. Rest, emotions, which are the major part to be handled, in no way can be learnt with a demo account.
Welcome to babypips. Well done on starting on a live account. I’d recommend starting with the 10k and only risk 1% a trade. It’s a good amount of capital to start with and build on.
However, please make sure you have back tested and you know your maximum drawdown.
Doing well I think. Annoyingly the first couple of trades were pretty substantial losses but I’ve clawed back to £191… I attach a screenshot of performance!
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