8. Over-Trading Archives

Moving From A Demo To A Live Trading Account

 

This is a trader question from email.

Bruce asks:
I’ve been trading in demo accounts to get started and am getting ready to start a real account with trading capital. In the past I have made some mistakes which have lost all my demo capital.

I’d like to start with a small account, using real money and grow it. How can I work a small account into a larger account?

Bruce.

Neal responds:
In a demo account you will probably be taking more significant risks. You will be testing new ideas, taking some bad trades, and experimenting. sometimes you’ll take trades with excessive risk. Any of those can erase your account, whether it’s a demo account or real money.

Don’t rush to a live account, because there are many lessons to be learned without risking actual cash. When you do trade a live account, you will be trading with a drastically different mindset, so there will be some adjustment and a new learning curve.

With a live account, trading real cash, you will have to learn to take smaller trades, with less risk, to trade more cautiously.

To build a small account, you will probably have to take smaller profits, have close stops, and avoid those long-shot big winners that you may have tried in your demo account. Try this in your demo account first. If you are consistently making smaller proftis and keeping risk under control, you could be ready to move to a live trading account.

Once you have developed confidence in a demo account, you will know when you are ready to use actual trading capital. If you are unsure, then you are not ready to make the move. Evaluate your confidence level before making the switch. The insecurities and fears you have will not be any less when real money is on the line. When you make the switch, trade conservatively for some time, that’s what it takes to survive.

The biggest difference between trading a demo account and a live account, is how you react to stress. It’s all in your mind, your comfort, your confidence. Developing that confidence through practical experience in a demo account is a great way to start. If you can remain calm and make good decisions while risking real money, you’ll make the transition smoothly.

-Neal. (FibMaster’s Fibonacci Trading Course)

The Solution To Over-Trading

 

This is a trader question from the Fibonacci Trading Forum.

Bert says:
Overtrading, my self-discipline, I struggle with those the most.

Neal responds:
There can be many reasons for over-trading, so it could be beneficial to analyze the causes of this problem.

Think about your trading, when you are over-trading, what are the circumstances? Are you bored, do you need excitement? Are you pressured by your setups and triggers to enter often? Are your stop-losses too close so you are exiting and have to re-enter frequently? Are the trends weak so you have too much whipsaw? Are you trading lower time-fames, those micro-wiggles with excessive noise?

All of those reasons can have solutions. After carefully assessing the causes, you can begin to solve the problem.

-Neal (FibMaster’s Fibonacci Trading Course)