0. Trading Psychology Introduction 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?


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)

Trading Discipline For Consistent Success


This post was inspired by an email I received from a struggling trader yesterday. She was asking about what is missing, why she is struggling to find consistency.

Trading can become very emotional. Before the trade, there is fear of entering a position. During the trade there is the fear of risk and the natural drive to take profits after the trade clears break-even. There is also greed, sometimes a winning trade looks too good, so the trader does not want to exit.

How can a trader work towards consistent performance, towards profits? The answer is to be disciplined. Discipline is one of the most important skills to have.

It takes discipline to define a trading plan, and to stick to it. Discipline is required to stick you your best setups, to enter and exit when you should, and to control your risk exposure.

Discipline is key to long-term trading success, to profits, and key to survival. If a trader doesn’t follow rules, trade optimally, then the trader will eventually fail. The next time you make “bad” trades, resolve to be more deliberate, and more disciplined.

It’s not easy! Discipline does not come naturally, it takes repetition to for good habits. Every time you sit down to trade, consider whether you are being disciplined. Review your strategy, confirm that your risk is acceptable, that your trade setups meet your requirements, that you are not exiting or entering trades emotionally.

It takes constant work. No-one is perfect. Every time you fail to trade your plan, stop for a while, focus on discipline.

-Neal “FibMaster” Hughes.

The Secret To Trading


This is a trader question from the Fibonacci Trading Forum.

Neal asks:
What part of your trading do you need to improve?
Kim replies:
Trading psychology.

Neal responds:
Congratulations! You’ve discovered another “secret” to trading.. Trading is a complex activity, involving sometimes difficult decisions that can be effected by our emotions, and can have an effect on our emotions. Knowing how we react to risk, reward, and stress, and learning to control our behavior to make the best trading decisions, is part of the journey.

We’ll discuss this in a future Fibonacci Trading Forum webinar.

-Neal (FibMaster’s Fibonacci Trading Course)