Forex Trading: Switching from A Demo Account to A Live Account
One of the best ways to train yourself as a forex trader is by using a demo account. Many brokers in the market offer demo accounts to traders who want to get into the business. After learning all the things you need to learn about the market, you will need to move to an actual trading account. This process is often easy and straightforward. Some brokers make the process as seamless as possible by ensuring that all the details you included on your demo account are retained in your live account. But what are some of the key things to know about switching? How is this process like and what should you expect? Let us find out below.
Psychological shift
One of the main issues that will define your move to actual trading is psychology. For the first time, you will be both excited and concerned about live trading. The realities of gaining and losing money will hit you at once. You will thus be required to adjust as quickly as you can. The way you set up your mind will determine your success - especially during the first few days of live trading. Some traders tend to get overwhelmed by anxiety and they end up making mistakes that they wouldn't make with a demo trading account. You thus need to be psychologically prepared to handle the realities that come with live trading.
Depositing funds to your account
With live trading comes funding issues. You will need to transfer the amount that you intend to use for trading to your broker. Generally, brokers will take payment via the most common payment methods. Today, digital payment options like Paypal are accepted. You can also deposit your funds via traditional methods - including checks and bank wires. Your brokers will verify your identity when you have made an initial deposit to your account.
Managing your funds
Money management will become a reality for the first time. To succeed, managing your funds will be the most important factor. While most traders can keep track of their money, it is not so for those coming straight from a demo trading account. Sometimes the temptation is high to overtrade and experiment. You will, however, need to take the trading strategies that you learned more seriously. Managing your funds will involve letting go of some of the trades and focusing your efforts on a few. Ultimately, the better you are at minimizing losses, the longer you will have funds in your account.
Wins/Losses will be consistent
One of the key things you can expect when doing live trading is a consistent level of wins/losses. If you were making great wins with a demo account, you can expect to maintain the same level of wins if you continue trading as you were. If you were experiencing losses with your demo account, the losses are likely to be replicated on your actual trades. It is thus important to know that when moving to live trading, the records of your demo trading account will matter. Many traders tend to move from demo trading too early and make huge losses. Be sure to examine the trading data from your demo account before risking your real money.
The documentation needed
Finally, documentation will be part of your transition from demo to live trading. Confirmation of identity through the necessary documents will thus be among the first things you will do. Also, legal documents and information about your residency will be required. The financial markets are regulated by government bodies and documentation is necessary. There will also be agreements made between you and your brokers and you should be prepared for this. When upgrading your account, therefore, you should ensure to have all the possible documents needed to help you get into live trading.
To Sum Up
Moving from a demo account to live trading is not a complicated process. In fact, there is nothing that will change apart from the approval by relevant bodies and authorities. Other than that, it is only your decisions that will determine how easy it will be for you to succeed in your trading venture. A demo trading account can provide you with the experience but live trading will help you achieve real financial goals.
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