Many new traders trade with their milk money and wonder why they feel scared when they enter and watch their trade. If you want to trade calmly and rationally, you must trade with only money you can afford to lose.
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Great quote!
It is extremely important to use only the money you can afford to lose. This rule is applicable to any investment in general, but it is especially important for Forex trading due to the high risk associated with it - trader could easily lose all his initial investment just within a few trades.
At the same time, if the sum of the investment would be too small for the trader, he would not make trading decisions responsibly enough and will trade just like on demo.
This is the main idea of cent account - to use real money to create psychological conditions similar to real trading process but to use tiny amounts of money that almosy anyone could afford to lose.
One of the main aspects why trading for living is so difficult than only a few traders could manage with it is because it requires to have large investment capital exposed to risk or otherwise the profit would be too small to cover daily expenses. That is why full time traders have to risk with much more than they can afford to lose. To deal with such risk they employ advanced risk and money management systems that prevent them from losing too much in one trader or during one trading day because they need to be able to continue trading in future.
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What is this cent account you’re speaking of ? First I have heard it mentioned. I’m new to this but was advised to try demo account for 6 month before even thinking about doing it with real money.
perfect, never risk what you can’t afford to lose
Forget all those fixed time rules- it depends on your skill and talent how long you should trade demo. Some need more time, some less. Demo-trading should teach you:
-correct handling (from the practical point of view) of your platform (setting orders, stopps,closing…)
-starting with your first testing of your strategies
-observe and understand your trading under general market conditions (playing news trading, roller-coaster trading…)
When you drive in demo-profits, go real with small stake to see if your broker works also well on his real version (often there are significant differences)- if this also works, you can set larger positions.
This happened to me twice, and then i decided to demo full time, xollext an amount of money, and then just forget about it.
Easier said than done, i know.