Traders need to remind themselves of why they started to trade in the first place.  If it is for fun then never open a live account for the market will take all of your money.  I have seen traders literally lose millions of dollars in a few months because they did not take it seriously.  When they were up in a trade they would get greedy and leave the trade on, not even trading with a stop loss, then only to have the market turn and come back against them giving them a loss larger than the profit they were going to make.

One way to get over your addiction of always having to trade is to practice visualization trading.  Go over a set up in your mind.  See yourself entering the trade, managing the trade, and exiting the trade.  This way you will be developing your skills and not developing costly habits.

If a trader is not trading to make money, then they should not trade.  For if a trader is not making money then they are probable losing money, causing frustrations, and hardships on themselves and their finances.

When demo trading a trader should be developing discipline and the ability to wait for a trade to come to them.  It is easy to say “This doesn’t count; its only a demo account.”  This type of attitude and thinking will cause you to give up on a difficult trade and situation.  This is the time to stop and think of what you need to do to make the most of any trading situation you get into.

Demo trading is the time to become mechanical in trading.  A trader does certain things to get in the market and certain things to get out of the market.   A trader should practice trading without emotions see the set up, pull the trigger, set the stop loss, and manage the trade.  Practice what to do when it goes in your favor and practice what to do when it goes against you, and then do it over and over again.

Demo trading can be fun and we believe it definitely has its place when you are learning to trade the Forex markets. It’s also appropriate when practicing your entry and exit signals.

BUT trading forex in a demo account is NOT a video game where the entire purpose is all “fun and games”. Remember: Demo-trading forex can be fun when it reinforces skills. When a trader has a go-for-broke attitude in a demo account it will short cut their learning process.

What you do in practice trading will transfer to your live trading.  If you are serious about trading for profit then trade your demo account like a life account and put all your energies into developing your trading skills.

A trader can not put it all on the line and wait to see what happens.  If they do We all can probable tell them before hand what will happen to there account.  So we can sit back to wait and see what happens with their trading career.

One very important part on a trader’s path to success is to continue to demo trade.  By all means trade it like a live account.

In our opinion demo trading works when it prepares a trader to become skilled in identifying the proper set-ups, and allowing the trader to uncover their strengths and weaknesses in their trading. If you concentrate more on your strengths than the weaknesses, then the weaknesses will not be as much of a factor. Do what you do well over and over again until it is a mechanical reflex. When you improve your strengths it also helps correct your weaknesses and it is less stressful.

Don’t wait and see your live account disappear.  Take charge of both your live and demo trading.

When a trader is using a live account he pays more attention to the results, the cause and effects, or at least he should.  This gives psychological feedback to the trader.  In demo accounts the ability to learn from emotions during trading is limited. In fact, they are often non-existent because traders are not accountable for their actions. They have nothing to lose so they think.  They are losing valuable time because they are forming bad trading habits they will need to overcome if they get that far.

We suggest that you become accountable to someone else for your trading both live and demo.  Have a review of your trades at least weekly, see what you did right or wrong, and see if there were any improvements

Traders have the account history to monitor what they have done on their trades but they lack the discipline or knowledge on how to use this information.

We like to suggest that you take blocks of 20 trades to analyze.  Once you have completed the first block keep track of how many were profitable and how many were losers.  Keep track of the profit level.  Keep track of what you did right and what you did wrong. Keep track of how you felt on these trades.  Keep track of why you took each trade and why you closed each trade. Now take a second block of 20 trades and keep the same records you did on the first block of 20 trades. Watch for any improvements or digressions in your trading.

This is the beginning of your trade journal and part of your trading skill assessment.  Look at the following record that came form MetaTrader 4 trading platform.

Refer to figure 1.  The two arrows in the circles are the points where this trade was opened and closed.  You can get this information by gong to the account history, clicking on the closed trade, dragging it to the chart area and dropping it.  This will give you the markings of the trade.  You then can print this screen off, make any notes, and put it in your trade journal.

This makes a demo account productive if a trader will use it. They will not be a wait and see trader.

Examples of no risk control are: jumping out of an airplane at 10,000 feet without a parachute, going scuba diving without air in your tanks, or going bungee jumping with out a bungee cord.  Trading with out any risk control will have the same disastrous out come.  To have a positive out come a trader needs, at least, a stop loss, proper lot allocation, good money management, and a good exit strategy.  Anything less is just plain trading suicide.

It is very tempting when trading a demo account to over trade the account.  Let’s go for broke, or it’s only a demo or we haven’t got anything to lose attitude.  This is where bad habits are formed and they do carry over to the live trading.  A trader can get carried away and be in a situation like driving a car without brakes or up a creek without a paddle, not having any control but just going where the momentum takes them.

If a trader is serious about trading then risk control is a must.  Risk control falls in the category as one of the basics to successful trading.  If a trader is controlling risk they are taking charge of their trading and not waiting to see what happens.

When trading, how does a trader know which move is going to be the big move.  They don’t.  Trying to catch the big trades alone to get rich quick is a destructive habit.  A trader should take all good signal trades. By doing this, they will make a lot of small wins and catch a big dollar move once in awhile.  Usually by trying to trade only the big moves a trader is tempted to put large numbers of lots on the trade. With the multiple lots on the expected big move the trade will go against the trader often enough to blow up the account.  Stick to your trading rules by starting out small then adding onto the trade if it is a good one.

This type of trading problem is that it has NO relationship or correlation to the ability to do this in a REAL trading account. We have seen traders make lots of money quickly just to see them lose it all.   They have not learned how to trade,  they were just lucky in catching a trend for a good run and not knowing when to determine that the trend will end.  They had not developed the money management skills to keep the money they just made.

Take all trades on a demo and treat them as if they were being traded in a live account.