Why Demo Trade Your Forex Trading System?

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Once you think you have found a profitable way to trade it is vital that your demo trade your trading system on a demo account before trading live. In all honesty I have not always done this in the past but I know now that it would have saved me a lot of money.

Whilst I acknowledge that trading a demo account is not the same as trading a live account in terms of emotion it will allow you to test the actual fundemental basis for your chosen system. You will be able to test the system’s stop and target levels. You will be able to experience how slow order executions effect your trading system, although demos don’t usualy go through the same execution process as a live account.

Although the emotions of trading a demo account may not be the same as with real money that in effects teaches you how trading without emotions will make a difference to you trading.

Demo account trading for a period of time will also allow you to trade into a drawdown period which you may not be willing to do so with your own money. Again it will be a great lesson to learn.

You often find in forex trading that your system starts off well and then goes through the general ups and downs that come with trading for a living. If you can exeprience this before risking money it will make a vast difference to your trading once you go live.

After running a demo of yourforex trading system for a while you will then be ready to convert your account to a live account. Again converting you account from a demo to a live one using the same platform will provide consistancy that you need in trading. Firstly from an emotional point of view you will obviously be familiar with your trading platform but secondly, if you choose to trade a live account with a different provider you will get different results to your demo trading which may render all your demo testing useless.

Once converted to a live account you can then start of trading small if you like and increase your trading size as you progress or if you feel totally confident in your system, which you should given the testing, you can trade the same size as you did in the demo. Which ever preserves your capital the longest.

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