4 Considerations Before Trading Forex Live (Real Money)
Trading, like anything in life, needs practice if you want to become good at it. Luckily, with modern technology, there are ways to practice without spending any real money. Without the added risk, trading a demo can help traders hone their skills and become better by first losing fake money and not real money.
That’ll save you from trying to progress in the market without the emotional scarring of losing everything many times over because then you would be fighting an uphill battle. So gear up and go into the market well-prepared because you won’t be able to surf the markets on day 1, but being prepared will serve you well.
DO YOU HAVE A PLAN?
A lot! Of people (and I’m talking about a boat-load!) come into the market WITHOUT A PLAN. There are very serious people on the other end of your trade who are very determined to TAKE YOUR MONEY! How on earth do you meet them with no plan?
You can’t afford to! You would be better off spending your money on yourself and buying something nice with it. That would be a better feeling than losing that money because you had no plan on how you were going to trade your capital.
Take your time, study, analyze, and execute. Put in the chart time. The Forex market is not getting finished or used up. There’s no need to rush. Before you enter the market ensure that you have a proven plan of how you’re going to trade when the market opens.
Have you tried anything else?
This question is aimed at helping you get out of your own way. When you start trading you will be tempted to trade in different ways, ways that you believe can make you more money, especially when your first big drawdown comes.
It’s only natural and doesn’t make you a bad person, it happens to all of us. Sometimes this search can transform into the search for the “holy grail” (basically a system that never loses). Let me save you some time and tell you it doesn’t exist.
A strategy will make more money for you the more it SUITS you and has robust risk management. A trading strategy can be taught but the difference between traders that catch on quickly and those that struggle to simply copy a winning strategy is usually the strategy suits their personality.
Trying new things out on a demo account is MUCH cheaper than switching from strategy to strategy on a live account. This is because of ONE reason, you are trading inconsistently and inconsistent trading leads to inconsistent results.
A drawdown for one strategy can happen at the same time as a winning streak for another strategy. The way the market works you will usually be switching strategies at the wrong time when you are still inexperienced.
Do you have a positive expectancy?
For those who don’t know what a “positive expectancy” is, it’s an edge. An edge means over the long term you are EXPECTED to have a POSITIVE return on your money because your winners are more than your losers (either in percentage or in size).
Asking yourself this question can save you a lot of heartache and desperation. When you have a negative expectancy, so no edge, what looks like a drawdown can actually just be the negative edge playing out. So do your homework and find/build a strategy with a positive expectancy before you risk any real money trading it.
Before you place a trade with your REAL money. Ask yourself, do you have an edge?
Have you been trading consistently with consistent results?
This part is the last step before the jump in my opinion. There is only one thing left to master after you have reached this step. Your EMOTIONS.
Unfortunately, demo trading cannot teach you how to deal with the rollercoaster of emotions you’re going to feel in the live markets. Your emotions become much easier to control once you know you have a winning system and your losses are not so big that they give you sleepless nights.
All these little things add up to build confidence in the markets which is key to any trader’s success. Practice all these things because they are free to practice. Mastery of emotion is where the big bucks are made.
Now, for younger traders, I’ve always felt it’s better to just jump straight into the deep end and figure it out. But to those with responsibilities e.g Kids, Family that depends on them, Mortgages. DO NOT jump into anything without testing.
Take those extra careful steps and make time to learn every detail of the investment vehicle you want to get involved in. Everyone’s circumstances are different and everyone learns at a different pace.
Don’t bet the farm.
Don’t lose your shirt.
Cut the L.
Keep the W.
Live trading FAQ
Yes, but really it’s up to you. My only advice is if you decide to jump straight into live trading, trade with a small amount of money that you can afford to lose while you learn.
Brokers would like to assure you that it is but the biggest difference is the emotional management you have to master in live trading.