Demo Accounts and Trading Success

A lot of people who have only just found out or discovered the possibility of making money from trading tend to want to jump straight into trading for real. However I believe this a total recipe for disaster. People who get hired by the big proprietary trading desks don’t jump in the deep end and trade for real on their first day, no their is a long training process and many proprietary trading desks use demo accounts and simulations to train their prospective traders before letting them lose with the companies cash.  

The initial excitement that many get at the prospect of making money through trading pushes them to make the jump into real money trading far too early. Their is an awful lot to learn before one can make the jump into trading for real. Successful traders generally have a good understanding of the markets (or at least the market they deal with) and they have a strategy or have a plan of what they are going to trade. The fact that so many people jump blindly into trading before getting a real understanding of what they are doing is probably the reason why 80% of over the counter derivative traders are believed to lose money.  

However the internet is awash with information regarding trading. Their are posts and guides to  trading using various types of fundamental and technical analysis etc. One can easily access such information and learn a great deal at financial markets and trading them through derivatives (whether that be CFD’s or Financial Spreadbets etc). However theory alone is not enough to make one a successful trader, it was not until I got used to trading and tried my hand at trading different instruments did I really learn what I was good at. Now I primarily trade Indexes (mainly the FTSE) and ETF’s with some significant success. But at first my trading experience was very hit and miss and I had some bad experiences particularly with Forex. This cost me a significant but not crippling amount of money that I needn’t to have lost.  

Looking back at it, I should have spent a serious amount of time trying out different things on Demo Accounts. The majority of CFD and Financial spread-betting companies give you the opportunity to open a demo account, as they want to give you an opportunity to see what trading is like before you make the plunge. However a lot of these sites have a time limit on their demos which is unfortunate as I feel many people would benefit from several months of trying out various strategies to see what works for them. Or even if they are suited to trading at all as some people are just not cut out to trade financial instruments.  

To any who is looking to start trading online derivatives I suggest you open a demo account and treat it very seriously, as you would treat a real account. Try out a number of different strategies on the demo account and see how they work out. I still have a demo account at Plus500 (and no real money account) which I use to try out new strategies and see how they work. Remember you have no obligation to open real money account with any of the providers you open demo account with and it gives you a great opportunity to try stuff out.  

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