My Answer To The Question, Is Demo Trading Worth It?
I have to say that yes, demo trading is worth it. It is the best place to get real world trading experience and a tool I still use today. Yes, the giant of technical analysis and trading that you see before you is indeed a demo trader. I do it for a number of reasons but the top of the list has to be for safety. Demo trading provides a level of safety for my real-money account that you just can’t get anywhere else. Why is this? It is because I know better than to experiment, test or make wild speculations with my real money. Having the demo account provides a place for me to make those trades that don’t fit my general strategy thereby providing a layer of protection from the market and from myself.
Practice Makes Perfect
There are a number of reasons why demo trading is important. For a newbie it is important because it is where you learn the mechanics of trading. Trading demo answers a lot of questions, questions like what is a position, how to you buy it, what does it look like when it’s open, what does it look like when it is closed, how does money management work, how does money management affect my trades and many many other questions a newbie or inexperienced trader may have.
- Look at the picture above. I choose this one because it is a great example of how demo trading can help you get in synch with the market. How many hours of practice do you think these guys put in to be competitive?
Once the mechanics are learned, the demo account does not lose its importance. It also provides a training ground and launch pad for trading real money accounts. The novice trader can use the demo account to practice strategies, learn and study the market until they know it inside and out. A friend of mine, Okane, recently said something that I have found to be perfectly true. Trading the demo account, and studying the market, can help you develop a kind of sixth sense that will lead you to more profitable trading.
That is another top three reason why I like demo trading. It helps you get in tune with the market. I can readily admit that I am not always in tune with the market. Sometimes I have winning streaks, sometimes I have losing streaks. The demo account helps because when I realize I am on a bad streak, or just out of tune with market direction or churn, I can switch and start trading there. Then, when I am back in tune I can move my trades back to the real money account. Believe it or not this is a really valuable tool but one that requires a certain amount of self control to use.
- Trading With The Geek Account – explains my Geek Account and how I use demo trading on a week to week basis.
The number one reason I like my demo account is for accountability. It’s very easy to look at a chart and say, “I think the market is going up” or “I think the market is going down”. It is something else entirely to to say that and then act on it. Even writing it down is better than nothing but with a demo account it more real. You see the trade in the account, you see if it wins or loses and you see if your balance draws down. It may be a fake balance but losing points is losing points, if you want to win as a trader then you have to be able to win with demo money as well as real money.
Where To Find Quality Demo Trading
Unfortunately most binary options brokers don’t have quality demo trading. If they do it usually comes with a catch. Communitraders 2.0 is the demo trading platform I use for binary options. It is full service social trading platform that is completely free. It includes forums for talking to other traders but more importantly a complete demo service. The platform is intended to be compatible with most binary brokers so you can trade calls/puts, one touch and boundary options on a full list of assets with a wide range of expiry. If you want you can keep your trades to yourself, and track them on your profile page, or you can share them. Sharing them means other traders may ask you questions or give advice, or just say “hell yeah, great trade!”.
You can also start a trading diary or blog with the platform. All that takes is starting your own thread on the forum. This is what helped me get really good. Not only was I keeping track of trades on the demo, I was putting them out there for all to see. This made me focus twice as hard on making good decisions, use proper money management and being as right as I could be with my analysis.
Communitraders is looking for traders, demo users and bloggers right now. Here is a link to more information.