It is incredibly important that you use a demo account, you have probably been told this a number of different times, and it is true, a demo account is vital for becoming successful. Spending a lot of time on a demo account is not something that you should be ashamed of and not something that you should shy away from, it is a fantastic learning resource and a place for you to test out new ideas without any real risk.
One of the main benefits to a demo account is that there is no risk to you, unfortunately, this also means that there is no direct reward, you do not get anything monetarily out of trading on the demo account, so after an extended period of time, it can become boring and so the motivation to continue using it in a way that you would potentially use a live account will begin to dwindle.
This is the time when a lot of people will decide to jump into a live account, simply because they are a little bit boring to use the demo account. Jumping into a live account at this stage, with this mentality will only lead to a blown live account. It is perfectly normal to start to feel bored or to lose that enthusiasm when there is no direct reward from what you are doing, this is where you need to be able to teach yourself and to push yourself to be able to be successful in the demo account and to get the most out of it before moving over to a live account.
So let’s take a look at some things you can do to help you take the demo account a little more seriously.
Creating a Loss or Forfeit
One of the main problems behind a demo account is that when you lose or make a mistake, there is no actual punishment, you will just shrug it off and move on. This is of course completely the opposite of a live account, where a loss, no matter how small can hit you quite hard. It can be hard to take a loss on a demo account seriously due to that very reason. Over a longer period of time, this will ultimately make demo trading a little boring as there is no risk or reward to it, so there needs to be a way to counter this.
One way of countering this lack of loss is to create a real-world penalty that you need to do each time that you make a mistake or that you make a loss. This can be something simple or you can make it a little more realistic. To make things simple, every time you make a mistake or a loss, force yourself to do some pushups or some jumping jacks, this will make you want to work hard to avoid having to do the exercise. If this isn’t for you, you can make it a little more realistic, every time you make an error or a loss, put some money away into a savings account, you aren’t losing the money, but you no longer have direct access to it. You are learning the same ideas of losing access to money with a loss, but luckily aren’t actually losing any real money.
Give Yourself a Mark
One thing that makes trading a little different to a lot of other professions is that when you learn it yourself, there is no grading system, there are no final exams to make sure understand what it is that you have learned or what you are doing, this can make things a lot more accessible, but it also means that there are no knowledge checks along the way, there is no way for you to know how much of what you have learned you have actually taken in and understood. It is important to have an understanding of what you are doing well and not before moving on to a live account, so you do not make the same mistakes on a live account.
Due to this, it is important that you are able to rate yourself, of course, if you just give yourself a rating out of 10 then you will most likely go a bit higher than you probably should, that is the natural thing to do. So, instead, you need to be able to grade yourself on a number of different things, so here are a few things that you could potentially look at after each week or months to gauge how well you are doing.
- Do you follow your entry rules?
- Do you follow your exit rules?
- Do you stick to your risk management plan?
- How many trades did you take or miss?
- What is your profitability?
Grading yourself on these basic yet important aspects of your strategy will help keep you on track and will also help to show you exactly where you may be falling short., Work on anything that isn’t getting a 10, of course, you will never get a 10 in everything, so there will always be things for you to work on and improve. Until you are at a high rating for all sections, you should be remaining on a demo account.
This can go along with the grading system that you created above, except this time we are not looking at just grading, instead we are looking at setting specific targets, and then potentially rewarding ourselves for the work we have done. So let’s imagine that we want to set a target, we want to have a 50% win rate at the end of the month, or we want a 5% balance increase at the end of the month. They are specific goals that we are able to achieve.
One way to make it a little more interesting is to allow yourself to give yourself a little reward should you decide to reach that target. It doesn’t have to be anything huge, it could just be a simple take away or a new pair of trainers. Setting this goal keeps you motivated to work hard on the demo account, but also rewards you for working hard.
Getting feedback on your demo account results and progress can give you a lot of validation around what it is that you are actually doing. Posting your results and account statistics on various trading forums will allow others to let you know how you are doing, this is a way of motivating yourself with the positive comments, or where people have offered some constructive criticisms, it is a way to improve the way that you trade.
Feedback can be powerful and it is a fantastic way to keep improving the way that you trade, but also gives you an insight into what others are doing, the demo account is the perfect place for you to try out any of the possible changes that the feedback has offered.
So those are a few different ways that can help you to keep taking a demo account seriously. Demo accounts are so important, they are a risk-free way to improve and learn, but that risk-free aspect also comes with no rewards, so it is important to find ways to help keep yourself motivated at using a demo account to keep it relevant and to help prevent you from jumping over to a live account too quickly.