6. Practice with demo until you have consistent profit.

Demo trading is very important, because:

  • You will know the risks, strengths and weakness of your trading system.
  • You will get used to your trading system.
  • You will get used to your trading platform.
  • You can make mistakes and learn from them. You do not have the luxury to make a mistake when you trade life, especially if you use high leverage.
  • It is your exam to prove that you can make a consistent profit. If you can not make a consistent profit in demo trading, do not expect that you will succeed in trading business.

 

I take notice that a lot of newbies will make profit in demo trading, the reasons are:

  • In demo trading they will get sufficient capital. They can open their demo account with 100,000 USD capital; contrary to when they open their life trading accounts, most of newbies will open a trading account with under 1,000 USD capital.
  • When the price is against them, most newbies will simply let the trade floating with loss. And guess what, the price will bounce back and end the trade with profit.
  • The mentality is different from life trading. They do not have the burden of losing real money when they demo trade.

 

So when you demo trade, make sure that:

  • You strictly follow the trading system you intend to use in life trading.
  • You use the capital that reflects your life trade will be.
  • You make yourself believe that you do not demo trade but you do life trade.
  • You demo trade at least for 3 – 6 months.
  • You will not trade life if you do not make consistent profit in demo trading.