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How long should you trade in demo before considering to open a real account?

Discussion in 'Personal Finance' started by robruf, Aug 31, 2016.

  1. robruf

    robruf New Member

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    Let's assume your demo account shows some good profits after a year. Would it be wise considering to open a real account?
     
  2. Rohit

    Rohit New Member

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    Yes but i would recommend starting with small capital. I remember when i started trading i did it with a 1000$.
    I kept adding more capital slowly as i became more comfortable.
    Goodluck
     
    Onepoint272 likes this.
  3. robruf

    robruf New Member

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    $1000 is way too low, imho.
     
  4. T0rm3nted

    T0rm3nted Moderator
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    My suggestion is to treat your Paper trading account like it is your real account. Make trades in it at the same size you will be making trades in your real account (if you're going to deposit $5K when you start, only use $5K in your trading account). This will help you treat it as if it's real.

    All the trades should be the same size as your real account. They shouldn't be gambles, but should be following a system where you plan your trades (entry prices, stop, target, etc.) and stick to that plan.

    If you are seeing success, there's no defined time to when you can enter the market. As long as you see the system you're using works, you'll know you have a working system.

    Then comes the hard part. Doing EXACTLY the same thing when it's real money. You already know it works, so stick to it. Don't let emotion run your trades. Don't take unnecessary risks because you just had some money settle after a trade and don't wanna wait a few weeks for a better entry. Don't ignore your targets because you're greedy. Etc etc etc.

    Good luck!
     
    leonx81, JerryM and Tiptopptrader like this.
  5. Tiptopptrader

    Tiptopptrader Well-Known Member

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    @T0rm3nted makes some very good points. Let me just add fear and greed to the mix

    When it looks like the markets are falling off a cliff and the sky is falling don't let that prevent you from buying at bargain prices
    You still want to buy carefully in case the markets continue to drop. So manage your money and make your buys in tiers to be safe. To add to that, it is good time to buy mid to long term calls.

    When you have stocks that are skyrocketing in price, don't let greed keep you from taking some profits

    TTT
     
    leonx81 likes this.
  6. JerryM

    JerryM Well-Known Member

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    T0rm3nted has a great post there. The only other thing I'd add is to remember the disclaimer that is frequently used by funds, "Past performance is no guarantee of future results." As long as you have been using some sort of evaluation of your positions and then position sizing trades to define your risk and have an entry plan and exit strategy on your trades during your paper trading, then carrying that over to real money should be helpful. Following the plan helps eliminate that dreaded emotion factor that T0rm3nted talked about. Good luck...
     
    leonx81 likes this.
  7. robruf

    robruf New Member

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    Thanks guys, I really appreciate your advices.

    @T0rm3nted Great post mate, thanks. What you said was the first thing I thought when I opened my demo account. There's no point in treating a demo account differently from a real one. I'm treating mine as if it were real money, and I'm doing the best I can to manage it in the right way :)

    @Tiptopptrader and @JerryM, good points, I'll take note. Thanks a lot :)
     
  8. Zaysev

    Zaysev Member

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    Since you're asking this question, I suppose you've already decided for yourself that you are ready to begin real trading, and what you wanted from this thread is a confirmation of your feelings :D
     
  9. Andrew Duff

    Andrew Duff New Member

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    I would advise people to get professional training if they can,before they enter live markets.Demo is fine to test different strategies.One way to prepare you for live markets is to work with a small amount of cash in your demo,say 5000 or less,this way you will be more careful with how your trading and you will feel a bit of pressure to protect it.
     
  10. Gambit

    Gambit Active Member

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    How many strategies there are? (for trading)
     
  11. JerryM

    JerryM Well-Known Member

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    In stocks, there are probably 3 overall strategies, growth, value, and income. But portions of each can be combined into your own personal strategy. So you could have one that combines growth and value, value and income, or any other blended approach you can make sense of. It does require some "study" to learn what is incorporated into each of the 3 before one can take the parts of each into a blended approach. Also, in picking a strategy one needs to know the time frame and risk appetite they have.
     
  12. Onepoint272

    Onepoint272 Active Member

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    Okay, someone has to be honest here. Paper trading is for milk toast mambies. The single greatest thing you have to learn is how to take a loss without flinching and you'll never learn that lesson paper trading. Trade small but trade for real, I say.
     
  13. T0rm3nted

    T0rm3nted Moderator
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    I agree that no matter how much paper trading you do, you will never learn how to handle your emotions simply paper trading. I disagree that you can't learn anything from it though and that you should not start by paper trading. Paper trading will give you an idea how the market works if you have no experience with it, and will allow you to develop the beginnings of a "system" that works for you. Do you like to learn about fundamentals, technical analysis, etc. Do you enjoy and find success long-term investing with dividends, swing trading, day trading, scalping, etc.

    If you are unfamiliar with the market or how stocks react to news, chart patterns, etc. you can learn a lot without any risk by paper trading. Once you're familiar with that stuff though, you do need to start small and play around with money you can afford to lose. Handling you emotions is what separates losers from winners, IMO.
     
    JerryM and Onepoint272 like this.
  14. JerryM

    JerryM Well-Known Member

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    Couldn't disagree with you more :D
     
  15. Onepoint272

    Onepoint272 Active Member

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    For "trading" there are many, many strategies. Check out the Forex Peace Army site for basic training.

    http://www.forexpeacearmy.com/community/forums/158/

    Unless you plan to trade Forex or currency futures, I'd start with Chapter 6 and take the "Fundamental Analysis" stuff with a grain of salt. A primary principal of markets is that price is a function of supply and demand; in the case of stocks, the supply of, and demand for the "stock", not the widgets that the company sells. Therefore, for me, fundamental analysis is useless and besides that, the information available to the public is very subjective and biased to someone's agenda. For example, big interests will "talk" a stock down when they are buying. They control or are in bed with mass media and insiders. Likewise, they'll pour on the praise for a company's fundamentals when they are selling. But of course, it goes without saying, a novice shouldn't buy the stock of obviously crappy companies.

    If you are serious about understanding how markets really work, you have to become a student of Richard D. Wyckoff's writings, for example his claim for his 1931 course:

    I, therefore, claim that:
    -You need never read anything on the financial page of your newspaper except the table of stock prices and volumes.
    -You need pay no attention to the news, earnings, dividend rates or statements of corporations.
    -You need never study the financial or the business situation.
    -You need not understand railroad or industrial statistics, the money market, the crop situation, the bank statements, foreign trade or the political situation.
    -You can absolutely ignore all the thousands of tips, rumors, reports and especially the so-called inside information that flood Wall Street.
    -You can discard all of these completely and finally.
    UNLESS YOU DO THIS YOU WILL BE UNABLE TO GET THE BEST RESULTS
    FROM YOUR MARKET OPERATIONS.
     
    #15 Onepoint272, Nov 19, 2016
    Last edited: Nov 19, 2016
  16. Matt Ryans

    Matt Ryans New Member

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    In my opinion, the broker that you use is very important. Test them for at least 3 months. It might sound long but its not.
     

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