How do you learn to be a really good trader?

A typical experience might be to learn a trading strategy, apply it to a demo account (or paper trade it) and then take it live once some virtual profits have been seen.

And that’s a perfectly sensible way to go about things.

Problems can arise, though, as soon as REAL MONEY is dropped into the equation.

It’s a strange phenomenon because in theory nothing has really changed. The markets still behave the same, the execution of trades is still carried out in the same way on the broker’s platform, the strategy rules are still valid…

So why don’t all traders make the move from demo trading to live trading and enjoy spectacular results?

It’s because of one thing you cannot afford to underestimate:

The mind-bending effect of putting hard cash on the line!

Think about it…

This is money the trader may have worked hard to accumulate. He may have become emotionally attached to it. And it’s money he probably isn’t really ready to risk in the markets.

His self-preservation instinct sabotages his successful methodology. Trades are missed or taken without discipline, and he can become disheartened with real-world results pretty quickly.

But I think this happens only because so many traders miss going through an appropriate transition period.

Many traders try to go straight from using a demo account to a fully funded real money account.

The pressure to perform they place upon themselves is too great – it’s like going straight from riding a bike with stabilisers to lining up with the Tour de France riders. Expectations are too high.

But accept you’re still fresh faced and learning, be prepared to take the odd little tumble in a safe environment, and your path to the big time can be so much smoother.

Instead of this:

Demo trading > Virtual Profits > Fund full size account > PRESSURE TO PERFORM

Why not try this:

Demo trading > Virtual Profits > Fund small real money account > Consistent Profits > Increase account size > Consistent Profits > Increase account size > CONSISTENT FULL SIZE PROFITS

I suppose it’s the natural human desire to make big money fast that gets in the way. But scale into your full size account incrementally and you’re protecting your trading bankroll while you harden yourself to real world conditions.

There is so much to be said for trading with real money – it’s a completely different world to demo trading, purely because of the mental aspects of assuming risk – but do expose yourself to it in a SMALL way first, especially since it’s so easy to trade from 10p per pip with most brokers these days.

Build up your resistance to performance-pressure gently and your probability of successfully transitioning into full size, real money trading increases exponentially.

Until next time…