One of the most common questions a new trader has is, “when should I retire the demo account and go live with my trades?”
This is a very important question. Moving live too early can lose you tons of money, but, as you see your practice trades growing and you aren’t really earning, it could make you a little uneasy as you think about all of the money you could have made.
Reach Consistency First
The answer to when you should start live trading is different for everybody. Having been in this position myself and seeing others struggle with this transition as well, I believe that traders should be in a demo account until they reach consistency where you’re winning more trades than you’re losing on a regular basis.
Essentially, it’s about being comfortable with the returns. Not only does this give you confidence in your ability as a trader, it shows that you are using strategies that work, that you know how to use effectively, and that your equity management technique is going to keep you safe.
Everyone judges consistency differently, but the point is that you want to make sure that you aren’t just getting lucky with your trades then moving forward with stuff that might not really work. Each person is different in this aspect. Some traders jump from demo to live in two weeks and others take their time and move over after a few months.
Your main focus should be on the ability to predict your return on investment (ROI) accurately and your comfort level to execute trading strategies properly. In the end, it’s up to you, but don’t take this decision lightly. Also, I would suggest that you never completely stop using a demo account.
Never Stop Testing In a Demo Account
Whenever you find a new strategy, want to try a new system or are just unsure of something new you’ve learned, go back to square one. I’m not saying for very long if you are anxious, but you should consider testing everything completely new out.
I can’t even begin to tell you the countless times that I’ve been in a room where someone got overzealous with a new trick they found only to learn that they were missing one component or that their “holy grail” of a new technique couldn’t win at a profitable rate although they saw it work once.
Either way, it all boils down to protecting your investment well. Remember, look for consistency and confidence before going live. Then, never neglect to utilize a demo account with a new technique or strategy until it has proven itself to you enough times that you are comfortable with throwing real money into the mix.