Forex Graduation Tricks for Demo Traders

Demo trading is great. But it should be just that - a demo. The downside to developing a career as a Forex Trader is that you will need to learn how to manage the feelings caused by losing real money. The upside to this concept is that nowhere does it say that you have to lose truckloads of cash while earning your stripes.

Consider this. Find a broker that lets you operate a $100 account, and place $1 trades. If you can see beyond the size of the numbers involved, and turn that $1 into $1.50 more than half the times you trade you are firmly on the road to becoming a very rich trader. When you do lose that hard earned $1 of real money, you can start developing your emotional management skills far beyond what can be gained from bravely pressing the reset button on your demo account to top it up with another $10k of computer game money. Trading in the real world will also give you a taste of how government taxes and cleverly hidden broker fees shape your "gross" trading profits into a "net" one.

Another smart trick is to CHOOSE to use low leverage (like 20:1). Don't get sucked in by the hype telling you that 400:1 leverage will let you strike gold overnight. Excessive leverage is for those who enjoy donating money into global financial markets more than pulling money out of them. Combine this low leverage trick with position sizing rules (like limiting your risk to no more than 1% of your total account per trade) and you have the settings for inevitable long-term success. Unless you trade without setting stops. Or drive without wearing a seatbelt.

Learn how to be patient and wait for the right trades to come along. As painful as it can be to watch millions of $ worth of slippery pips being waved in front of your face, try to manage and resist the urge to jump at the first thing, anything, that resembles an opportunity. It might really suck to hang back and not trade if you are unsure with what the market is doing - but hanging back is still more fun and profitable than steadily going broke! Even if you don't get to place a trade after putting in the hard hours of research and monitoring, that time is never wasted. These hours can put wads of cash into your pockets in future years.

Know the difference between facts and opinions. Learn how to block out "noise" (people telling you what they think will happen and you acting on it - learn to think for yourself). This is where pure technical analysis skills will tell you everything you need to know to make independent trading decisions. FX markets are driven by dealers, powerful institutions, and veteran traders. These are the people that you must trade with ...or against. Old-school traditional trading techniques that have proven the test of time will out perform any new gimmick indicator-combo or psychic super-guru, especially over the length of your trading career. But that's just an opinion.

Good luck with your trading - keep it real...