We all know that trading is one of the riskiest professions in the world because it is directly related to money. So we always need to be alert when we are making any trading decision and always take advantage of everything to reduce the risk. Before making sure that you can make money from trading it will be not clever to start trading with real balance. So almost every broker provides the opportunity to practice trading with a demo trading account where you can trade in the real market without taking any risk of money. In this article, we are going to talk about why you should use a demo trading account before starting to trade with a real account.
Building strategy
When you finish learning about the basics of trading you must go for a more complicated part of trading. It is better if you can trade and learn and it is one of the most effective ways of learning to trade. So if you try to trade with just basic knowledge then it will be very risky cause for doing any mistake the market will take your money away. Here is the advantage of trading with a demo trading account that you will not lose money if you make mistake rather than you can work on that weakness of you so that you do not repeat that mistake. So you can make the best trading strategy for you when you are trading and learning so that you do not miss anything you need to know about trading.
Lot size calculations
Whenever you think you are ready for starting trading then the first thing you need to fix the amount of money from your trading balance that you are ready to lose. On behalf of that amount you are ready to lose you just need to fix a risk-reward ratio and according to that, you have to fix your lot size. It is not possible to fix a lot of size in the amateur period of your trading career. So when you are trading with a demo account then you must fix a lot size according to trading balance by practicing trade with various lot sizes. By that, you can fix the lot size more practically and deal with the CFD market more strategically.
Support and resistance
Most of the traders try to buy at support and sell at resistance and this is the safest way of trading. But finding reliable support and resistance is not an easy task and without identifying it you will never get potential profit. So identifying effective support and resistance need months of practice till you can be a master of it and for becoming a master of that there is no other option than using a demo trading account. Even if you want to lock your profit in a perfect position then there is no other option than to become a master of identifying support and resistance level.
Keep it close to real
We suggest you keep your demo trading account as close as your real one by trading with the same amount of trading balance that you are trying to start your trading career. You must not switch to trading with a real trading balance until you make it double at least two times in your demo trading account. These will help you to boost your confidence level to a place that you will not feel nervous when you are deciding on your real trading account. Building up your confidence level is a must to reduce the chances of ignoring your trading strategy while trading with real balance. Once you are confident enough with your strategy then nothing can stop you to have a good trading career.
So as trading is a risky profession you must need to take advantage of everything available for reducing the trading risk. We hope this article will come in handy for your safe trading career.
