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The complete guide to demo trading


So you went to a broker’s website and decided to open a forex trading demo account before risking real money.

Good choice!

However, there is something about demo trading that can cost you money in the future.

That is why in this guide …

You will discover the good and the bad of demo trading and how you can use it to your advantage to make money in the long run.


But first…

What is demo trading and how does it work

To put it simply…

Demo trading lets you use your broker’s platform without risking real money on the line.

This means that you will be trading in virtual money, just like a trading simulator.

What does it mean?

This means that you get the chance to:

  1. Make your trading platform known
  2. Smash that buying and selling barely as many times as you want to have a sense of what “trading” is
  3. Test your strategies without losing actual money if things do not work out

Excellent, am I right?

But of course…

It also means you are not going to put actual cash in your pocket either.

It is true. You cannot withdraw actual cash from your demo trading account (duh).

Now here’s the thing:

As sexy as demo trading sounds …

The truth is that it can help you lose weight rather than make money when you trade for real money.

Let me explain why in the next section …

Why demo trading can put you at risk of error

Almost every experienced dealer out there will share a similar thing:

They experienced losses when they started trading with real money even though they had made money on their forex demo account.


Is it because their broker is cheating on them?

Maybe their strategy does not work in real time?


Let me show you the real reason why …

No emotional attachment to money

Let’s say you had a $ 1,000 loss on a single trade.

On a demo trading account you will probably say:

“Eh, I’m just resetting my virtual account and trying again.”


You can not say the same with a live trading account, can you?

You would rather feel frustrated.

You begin to doubt your strategy.

You start finding shortcuts and searching the internet for strategies and trading robots.

Do you see what I mean?

Therefore, it is important to focus on nurturing good trading habits on demo trading before trading live (which we will discuss later).

No risk management in place

If you enter random numbers on how many numbers or shares you want to buy …

Then you are playing and not treating trade like a real business.


Because if you are not sure how much money you are potentially going to lose before entering the trade, or do not know where you will end up when you make a mistake …

Then you would not know how much you could potentially earn and would not know when you will quit when you are right.

What is risk management, you say?


It aims to keep your losses small so that your portfolio can live long enough to experience gains.

And if you want to learn how to apply risk management step by step …

Check this out: Forex Risk Management and Position Size (The Complete Guide)

Spend too much time on demo trading

I will not lie to you …

Being a demo trader does not make you a real trader.


This is because your response to losses on a forex demo account is very different from trading real money.

And when you trade with real money …

How you react and trade from losses (which all traders have at some point) is what will really define you as a trader.

So if you spend months or even years on demo trading, it is not the money you are missing.

But your growth as a trader.

So with that said …

Does that mean demo trading is a waste of time?

What if there is a way to make demo trading work to your advantage?

Fortunately, it is there.

And that’s what I’ll show you in the next section.

Keep reading…

How to Demonstrate Trading Properly and Set for Live Trading Success

It does not matter if you are someone who lost money live trading before and stopped, or an entrepreneur-novice who has never lived traded.

This step-by-step process can drive your results and experience trading as painlessly as possible.

Are you ready?

Let’s get started…

Step 1: Have a trading plan

Having a business plan is the same as having a business plan.

It is the deciding factor whether you make money or not in the following months or years to come.

Here are some questions to answer:

  • What is your trading method?
  • What is your trading style?
  • Which markets do you want to trade?
  • What time frame do you want to trade?
  • How will you quit when you make a mistake?
  • How will you quit when you’re right?
  • How will you apply position size before entering the trade?

I know these questions can be scary.

But luckily for you, there is a “cheat sheet” on how to answer these questions.

And they’re all here in this article: How To Become A Profitable Trader In The Next 180 Days (Even If You Are New To Trading)

Makes sense?

Step 2: Have a trading routine

It is a myth that you need to have time to monitor your trades all the time to be a trader.

It is true!

You will probably get better results if you spend most of your time away from your charts.

Therefore, you need a schedule for when and when you should not check in at your trading business.

Here are some ideas…

Example 1: Full-time employee, work from 9:00 to 17:00

  • 8: 00-08: 30 = Look for trading opportunities and place limit / stop orders
  • 12:30 to 13:00 = Check your portfolio and see if you have executed trades correctly
  • 18.00 to 18.30 = Journal and review your trades

Okay, so what if you have time on your hands and want to be a day trader?

Example 2: Full-time stock trading

  • 9:00 – 09:30 = Look for trading opportunities and free yourself from distraction
  • 9:30 – 12:00 = Perform your trades without interruption when the market opens and call it a day when it pauses (as most movement is present in the first half of the session)
  • 18.00 to 18.30 = Journal and review your trades


Your goal is to know when and when not to check your charts and find a convenient schedule that does not ruin your daily responsibilities.

It’s about time blocking.

Pretty cool stuff, right?

Step 3: Perform while shopping with demo

So how long do you have to demonstrate trade?

One month?

Four months?

One year?

The truth is that it depends …

If you are a day trader, you can consider demo trading for a month

However, if you are a swing trader, you can consider demo trading for three months

The concept is that the higher the frequency of your trades, the shorter time you should make demo trades, and vice versa, if the frequency of your trades is lower.


Your goal in demo trading is not just to test if your strategy works.

But to see if your trading plan or trading routine is for you, you can make tweaks along the way.


Step 4: Start shopping live as small as possible


It does not matter if you want to start with $ 100, $ 500 or $ 1,000.

What matters is that you get rid of demo trading.

Start trading live.

Start shopping small.

And start practicing good trading habits.

I know the feeling of being nervous when I shop for the first time and that’s okay.

But if you first start small to build trust, instead of going all-in with your family’s wealth (I hope not) …

You find yourself an excellent place to start trading and put yourself in an environment to keep improving yourself as a trader.

Sounds good?


Although demo trading can be abused and have its “traps” for new traders out there, it is never a waste of time as long as you know why you are demo trading in the first place.

That said, here’s what you learned today …

  • Demo trading allows you to use your broker’s trading platform risk free with virtual money.
  • Demo trading can give you errors if you do not have a trading plan or strategy to test.
  • Demo trading can allow you long-term success if you develop good trading habits before you start trading live.

Over to you…

What tips would you give to new traders when trading demos?

What do they need to know before they start trading live?

Leave a comment below and I would love to hear what you think …

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