WHEN I first started trading in 2006, I knew very little about the markets. I did know, however, that I should buy the US dollar on good news and sell it on bad news.
Starting out with €2,000 in my account as a university student, I had a wonderful start and generated a return of 40 per cent within weeks. This made sure that I was hooked.
Little did I know that I was trading with too much leverage and that I really did not know enough to beat the markets.
Yet trading with real money forced me to study very hard after my first trading disaster, when I managed to lose all my gains and a little more on top. I expect that I would never have bothered to learn to trade properly if I had not been trading with a real account.
I also learnt how to deal with the stress and excitement of trading with real money. This is something that will usually take months, or even years, depending on your ability to control your emotions. As a bonus, I learnt to respect the markets by using stop loss orders and waiting for good opportunities before risking my money.
With this little story, I want to reach out to all demo warriors. While it’s important to demo trade enough to understand how your broker’s platform works, you will never learn as much as when you trade in the real market. In the same way, you will never become the next Lionel Messi by sitting on your couch mashing the Playstation controller. You need to get out there.
Alejandro Zambrano is a currency strategy analyst at DailyFX.com.