If you’re a new trader who has discovered a profitable trading strategy, deciding when to begin live trading might be difficult. Since most novice traders compare themselves to others, they spend too much or too little time on demo accounts. While shifting from a demo to a live account, one can reduce costs by receiving rebates after trading. But never make a hurry in getting the benefit as it may turn against you if you are not prudent enough. So, if you want to trade live funds, here are some points you should comply with before you begin.
You are making regular profits on a demo account
There isn’t a single forex trader who can claim to have never lost a trade in his entire trading career. Given the market’s ever-changing conditions, losing is an integral part of the game.
Don’t beat yourself up if you lose a trade or two this week. Instead, concentrate on honing your skills in identifying high-probability setups with reasonable reward-to-risk ratios and devising strategies to assist you in minimizing your losses and maximizing your wins.
For that, keep track of your monthly profits on your demo account. That way, you’ll know whether you’re on the right track and can identify what has to be improved.
You have risk management qualities to stick on
Professionals believe that your ability to locate good setups determines 50% of your trading performance. The remaining 50% is dependent on sound risk management. A well-thought-out set of risk management rules is also on my checklist.
Sometimes the market goes wild, making you doubt your analysis and trading skills. During these trying times, your risk management strategy may be the only thing that keeps your account safe.
Before you consider going live, make sure you have a well-defined set of rules that tell you when you’ve lost enough or have been trading too much; otherwise, you’ll ruin yourself.
If you haven’t already, start by adding percentage risk, the maximum drawdown you can tolerate, and when to stop trading following a string of losses in your trading journal.
You have built enough temperament
Do you still get nervous when your trade goes against you? If you do, you should reconsider investing your hard-earned fortune in a live trading account. I realize it’s challenging to maintain your composure when you’re losing money. You can think clearly and evaluate the variation in your trade plan if you have a calm temperament.
You have tested the broker or platform you are dealing with
Before you open a live account and risk real money on your trades, you should be highly familiar with your trading platform.
Aside from that, you should be familiar with slippage, and your broker’s standard pip spreads so that you can account for them when placing orders. That’s why I encourage you to practice using a demo account from the same broker with whom you plan to open a live account.
Last but not least, you should be able to easily contact your broker if anything goes wrong with your account. After all, you’ll be entrusting them with your hard-earned money.
Even if you check off every item on this list, it does not guarantee that your demo trading success will be replicated on your live account. Remember that psychological factors will come into play, so I emphasized the necessity of growing your psychological capital above all. It may also be beneficial to ask your fellow traders what they think is essential to stepping from demo to live to trade.