The Forex Trading Course: A Self-Study Guide to Becoming a Successful Currency Trader, 2nd Edition

Chapter 16Transitioning to Real Trading

There are many ways to start and many ways to start wrong. Many traders start with too much money and too much leverage and quickly get caught in major drawdowns.

There is a better way that persons with various degrees of available trading capital can use. This section provides guidance on the essential ways of getting started and achieving adequate preparation.

One of the most useful tools to prepare for forex trading is the demo or simulated account. All firms provide these accounts. They enable a person to practice trading without the risk of loss. The trades go through an identical platform that would be used in real trades, but they do not execute. Instead, the profit and loss are hypothetical but tracked in the account history. The demo accounts are viewed and used by the forex firms as marketing tools for converting prospects into customer accounts. The problem is that these demo accounts are not designed to train people on trading. The result is that many people have observed the experience in going from simulated accounts, where they were making large profits, to real accounts with sudden and large losses.

However, demo accounts can be converted to testing one's trading skills under a plan of action that follows rules. The idea that one can start trading forex effectively by simply opening an account and beginning to trade invites too many pitfalls. Trading for the sake of trading is learning by trial and error. The risks of major ...