This is a question from a trader that just signed up for Jump Start. The answer will share our feelings about learning to become a good trader.
Question:
Okay great and thank you for your reply. I'll go through all of the Webinars for the jump-start program and if I have any questions I'll send them to you if that's okay. Also, in your experience was the demo helpful? The only reason I ask is because I have never been good about demo trading because it doesn't seem to simulate real spreads on your entries and it doesn't account for things like slippage. Also, there is no emotional aspect of it so that's tough too. I have made myself a demo account fortune but it didn't prepare me for the real game. Do you see a big value in demo trading first or should I just begin trading with small leverage and pay a "learning tuition" as I begin. Thanks for your help.
Reply:
We feel it is wise to learn how the tools work. First the trading platform, then the trading strategy by simulated trading, demo trading, then live trading. If you go through the motions of spotting the entry signals, placing the orders, managing the trade, getting an exit signal and closing the trade then when you go live it is all natural and can cut down on the emotions.
Vince Lombardi was big on doing the basics over and over again and again so you don’t even have to think when the big one came along you just react, you do not have to think about it just do it. I think demo trading is great for the above reason it develops your skills and trading reflexes. All traders can do what they would like in the way they would like. The most important thing is to learn how to use the tools. Why should you have a draw down in your live account while learning? We also feel that you should never stop demo trading.
If you have been away from the market for a while then you can demo trade to get back in the flow with the market. Not for long, just a few quick entries. If the demo trades start to work for you then you can move to your live account and hit all the, add on signals.
Demo trading is not to make a lot of money; it is to develop the reflexes and skills to trade well. The slippage has nothing to do with being a good trader the spread being a little wider says you are trading the news. Usually when the spreads come back to normal there will be some good entry signals as well. The spread can act as a barometer for the sentiment of the market, is it settled and has it found a direction to go or is it bouncing up and down.
We hope this is not too strong. Everyone should treat the demo as if it were a live account, having the emotion and being invested in the trade.