How to Flip the Switch and Move from Demo to Live Trading Part I

Flip the Switch
Flip from Demo to Live.

Talking Points:

Defining Success in Live Trading

Treat Each Trade as a Little Best or Test

Expect to Tweak If Strategy Isn’t Working

Most traders who come into the Forex market start with a demo or practice accounts. Practice accounts are unique to the Forex market and that they allow you to get a sense for the leverage, costs, margin hours, volatility, and trading platform of one or multiple potential brokers.

However, flipping the switch from a demo to a live account is often nerve-racking unnecessarily.

Let’s take a look at what has to happen for a demo trader goes live as well as a few thoughts on how to get the most of your first 90 days in live accounts to ease the nervousness while at the same time enhancing the experience.

Define Success in Live Trading In Stages

The common problem of most traders is an unrealistic definition of success in the early months of their trading. Years ago, an experienced trader told me that they had divided their trading career into three stages that spanned it 10 years each. The first third was learning how to survive the market however, he wasn’t able to escape without a few margin goals. The second third, was actually growing his accounts while seeking the number of equity drawdowns diminish over the years. The last third, was when the typical definition of success became a reality.

While his timing was unique to him based on things going on in his life, the three stages is helpful for you to understand that success needs to be to find an early struggles are okay. As a trading instructor for daily FX, I often speak to traders who do not define specifically what success looks like for them, which often pushes them into the trap of trying to hit it big early.

If you have read market wizards or other accounts of traders from years past many have a common theme in their progression from learning about the markets, trading the markets live, and then achieving success. In the bygone years of trading pits, before computers took over the markets many of the famous traders interviewed in market wizards were often order runners for bigger traders or banks on an exchange floor. Being an order runner gave them the ability to look across the field of traders and see who is successful and who is not and why before they ever placed their first live trade.

Once they were able to attract the capital to start trading live, then they realize the necessary business of learning how to survive the markets before thriving. This often brings about soul searching and strategy refinements the likes of which were not expected when first approaching the market. Often, the first lean years are a time of realizing many of the traders who they looked up to were better teachers than traders causing them to look to new places for enlightenment on the markets.

After working in a role that allowed many of them to see who is successful, who was not and why and beginning to trade live themselves, then were the few that have survived this far able to take their trading to a new level.

We will discuss the building blocks on how to get the best start in part two.

Part 1 Summary

Socrates said, “The beginning of wisdom is the definition of terms.” Sadly, many new traders to the Forex market failed to define what successful means of them. Based on my experience and looking over the experience of other traders, many have gone through stages of development that led them to success. Use that information and see how that would apply to you specifically to help get you through the often difficult initial stages of your trading.

Disclaimer: Tyler L. Yell, CMT, works for Forex Capital Markets also known as FXCM.

However, information above is applicable to any broker you just choose to give your investing business.