You’ve been trading a demo account for a while now. You’ve read about technical analysis, fundamental analysis and you think your pretty on top of it. Your demo trading was extremely profitable – you made $25 000 profit on your demo account in just one month. You decide you’re going to begin trading with real money…
You open a real account and deposit $10 000 – a significant portion of your savings. Your first trade loses: -5%. Your next trade loses: -5%. You’re now down $1000 in two days. You think to yourself:
“That took me a week to earn that money, now it’s gone in two days!”
What’s different here? You had two losses in a row on your demo account, you came back. You weren’t scared – it was like a game, it was fun – it even seemed easy.
Trading Forex with real money isn’t a game. The psychological difference between actually losing $1000 and losing some numbers on a demo account cannot be quantified. To be successful, you need to overcome this. You were extremely profitable on the demo account and if you stick to your guns and trade the same strategy – you will come back. In fact, if you’re trading with a positive risk to reward ratio – you’ll be back at breakeven on your next trade … and in profit on the one after that.
Trading psychology is often paradoxical; fear of losing can cause you to lose, ‘knowing’ you’re on a good trade is often even more damaging. To be successful, you must detach from these feelings. To be a successful trader; you need to be ‘cold as ice’.
From Module 3, we encourage you to take the next step in your forex trading (if you’re ready of course), and open a live account with Vantage.