Benefits of Live Trading

Live Trading Builds More Confidence than Demo Accounts

Usually people take a substantial amount of time for practicing on their demo trading accounts and after a certain period, they start earning profits on these accounts. Although, they gain enough experience on these platforms, yet, it is nothing compared to live trading accounts. The moment they switch from demo accounts to live accounts, they begin to experience losses. Being a trader, you should avoid it and if you really want to gain experience, start with a small sum of money and gain experience from live trading. One cannot deny that demo trading has its own value, but by the end of the day, if you do not experience the real market, you shall not be able to develop the required trading skills that are necessary for live trading. A trader should not spend too much time on demo trading if he wants to learn the tactics of real time trading.

If you think about it for a minute, demo trading is done in a simulated environment. It can never be like live trading where market sentiment is one of the vital factors that affect your trading decisions. However, you do not necessarily have to invest a large sum of money when you enter into live trading. Being a new entrant in the market, it is better to keep your risk to a minimum and for that, you can start with a small amount of cash. Once you are comfortable with the trading platform and gain some experience, you can invest more money in the market. An experienced trader can understand the market fluctuations and trends better than the new entrants and therefore, is more likely to place successful trades with his live account.

Whenever you enter into live trading, it is important for you to maintain a dollar per trade risk level. It varies from one trader to another. With the passage of time, you gain more confidence as you get experience of the market, which also enables you to increase the risk level by increasing the amount you invest. Assessing your risk in dollars helps you measure your trading goals and minimize your risk to a minimum by defining the potential amount that you can afford to lose on a trade. You shall not be able to experience any of it with your demo account. This is the reason why at some point, you should switch to live trading.

When you get to perform well with demo accounts, you create a false illusion that you will perform well with live accounts as well, but that is not true. As a matter of fact, when a trader moves to live account, he usually makes huge losses at the start because trading in the real market is completely different from the simulated environment. When you trade with the real money, you experience emotional ups and downs, but the confidence you gain while trading with the demo account may not help you in live trading as it doesn’t involve actual emotions or sentiments. This is the reason why when a trader enters into live trading with false hopes and confidence, he starts losing his money very quickly. Losing money is a part of trading, but you can learn to tackle it by proper management of your investment.

Therefore, whenever you plan to gain trading experience, it is better to start from live platform with a small sum of money as it will keep your risk of loss to a minimum and will help you gain experience of the real world trading.