One of the most important things to keep in mind is that trading a real account is very different from a demo account, at least from a psychological point of view. Changing a demo account to a real account is a relatively simple process. Depending on your broker, it can be as easy as clicking on a web page several times to fund an account and then start trading live.
As a last resort, most of the brokers are trying to reach do live trading, and the demo account is the first part of the process to accept a new customer. After all, you are now starting to lose money and that is much more painful than being wrong in a trade. If you’re wrong on a demo account, your pride is at stake. If you’re wrong on a real account, your pride and your money are on the line.
Documentation
When you are ready to open a real account, you will need to facilitate a certain amount of documentation. In general, you are usually offered a real account only after you can prove your identity, residence, and any other legal document required for the regulatory entity with which the broker must deal. In general, you’re seeing some kind of government identification and some kind of utility bill from the address you live at. Beyond that, there will be some legal documents to sign that will be provided by the firm’s attorneys.
There will probably be some code of conduct agreement as well as even more if there is a social trading platform. Obviously, this will differ from Broker to Broker, but in general, these are the “rings” that will go through.
Funds
Financing will vary from Broker to Broker, but most of them will accept bank transfers, checks, and various types of electronic payments such as Paypal, Skrill, and many others. It is the part of financing that proof of identity is so important for brokers, as there are strict international laws against money laundering that brokerage accounts used to be used against. Financing can take only a few minutes, or a couple of days, depending on the broker’s administrative speed and the completed form.
The Psychology
The psychology of going live is a bit of a mix. Initially, it is an exciting time to be a trader because it suddenly becomes “real”. But fear also becomes a serious problem. Suddenly, losing does matter and you’ll realize that you feel much less comfortable when you operate on paper. The psychological part of trading is certainly the most difficult, but it is also the most important. It is your psychology that will help you through difficult times and keep you grounded during high times. I cannot stress this enough: its success lies within the realm of psychology and, of course, also of money management.
Administration of Funds
As mentioned above, money management is a big part of its success or failure. It really is true that random trading can generate profits if you use proper money management and psychology does not play against you. This is why many traders may have the same strategy as other traders and get completely different results. It’s about being able to keep your losses small and let your winners run. I know it’s a cliché, but it’s true, and that’s why you hear so much about it.
First, prove to yourself that you can win. One of the biggest mistakes I see that traders make is that they don’t succeed at demo trading initially before risking money. For that, it is supposed to be there a demo account, although I must admit that the vast majority of brokers use it as a commercial hook to increase their sales. Too many people are too excited about real-money trading to learn how to make long-term profits. Most brokers know this, so they have no problem giving away these free demo accounts because they know that it is very likely to go on the market long before it is profitable.
However, I ask you: “How can you expect to make money in the real world if you cannot do it in a simulated environment?” It’s a lot like allowing a doctor to practice in the real world who failed in medical school.
Too many people think they are going to enter the markets and carry out a massacre immediately, without understanding how difficult it is going to be profitable and successful in this effort. Actually, it can be a very rewarding race in which to participate, but you must take your time and be patient about the way the market moves.
Conclusion
Switching from demo to live account is relatively simple most of the time, but you need to have proper documentation. The real challenge comes down to doing it. If it is not profitable in a demo account, there is no way to do it in a real account. In fact, I can guarantee that you will end up losing your money. The average retail account is sold out in 90 days. Keep this in mind, but what I would say is that everything is avoidable, however, if you just take the time to learn how to trade, and only then do you start putting your money to work.
