Tradecraft

Is demo trading really worth it?

“You need mountains, long staircases don’t make good hikers.
Amit Kalantri, Wealth of Words

I’d like you to think about that statement for a moment there, I’ve seen a few people on the news recently in the Corona virus lockdown bravely taking on a mountain equivalent hike within their own homes climbing their staircases for charity which by the way is incredible, but does that make them competent hikers or mountain climbers? Probably not.

Many of these people have gone for the big one and climbed the height of Everest on the stairs, now I’m no professional climber but I’m dead sure the real thing is incomparably difficult. It can take a year of specialised training and up to $100,000 for everything you need and that’s if you’re fit from the beginning! With the unpredictable weather, lack of oxygen and rough terrain, the stairs don’t quite cut it.

I’m sure you can see where I’m going with this but there is a caveat to what I’m saying. Perhaps you had just climbed 8848m on your stairs, a hike up a 1085m mountain like Snowdon in the UK would probably be a piece of cake. Still nothing like hiking up a real mountain but you’d definitely have proven your fitness.


So, what am I getting at here?

In my view demo or paper trading definitely has its place in the tradersphere. For your initial meander into trading and speculation always start with a demo account as the last thing you want to do is go long a ten lot and not understand what going long a ten lot is…

concrete building
Photo by Henry & Co. on Pexels.com

Demo trading really helps you to understand the mechanics of your trading software, I remember opening my first trading program and being blown away by the amount of lines and squiggles. Getting to grip with what’s happening, being able to freely press buttons and play around with no danger of bankrupting yourself is an excellent way to start to get a grips as to what’s happening.

Once you have gotten an idea about your trading software and have a couple of viable trade ideas, again I’d say it’s worth testing them in demo but, only for a few trades. Its fine walking them staircases to get a feel for what its like, but the only way to really learn how to hike is to feel the wind in your face and the rough terrain beneath your boots. Likewise, with trading its just not real until there’s actual money on the line. From personal experience I could only ever take it truly seriously when real money was on the table and real pain was felt.

When deciding when to move from demo to real money remember that you can open tiny accounts with some brokers going as low as one pence per pip, now even with a tiny amount of money it does make it more real so don’t think you have to go from demo to all in, take it slow but make it real as soon as possible.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: