Whether you are new or proficient in the trading field – using the demo balance is the vital key for achieving success for every trader. As sportsmen train hard to keep in shape, spending hours on workouts, so a trader should always practice and enhance knowledge and skills to manage the trade wisely. Both short-term trading and long-term investments require being well-prepared for market changes. And the demo balance is the feature that helps to cut your losses and become an equipped trader to enter the market with real funds.
The practice balance is completely free and it can be replenished as many times as needed, which makes it a great way to test your trading skills.
When you just open the Platform and see its interface, the first thing you need to do is to surf through all instruments, chart types, menu bar, and deal settings. Try to open several deals on the demo balance and see what the opened deal looks like and how to close it; what differences there are between the deal opened for a binary option and for a Forex instrument, for example.
Once the deal is closed, make some notes on the reason you gained profit or loss and analyze it – that will surely help you to recognize the best entry and exit points when trading with real funds.
Make the practice balance feel real
When you have $10 000 on the balance it is easy to open numerous orders and see how the balance fluctuates. You already know that you can reload it at any point, but is it the same for a real balance? No, it is not. Thus, you should make practice balance feel more realistic. And here are the steps for that:
- Create a trading journal and keep track of all deals you are making, and gains and losses you have – this will give you a better understanding of how important risk management is.
- Open deals for the instrument and asset you are willing to use with the leverage you prefer.
- Start with small investments only.
- Follow your trade and close it once you find it necessary.
- Analyze your results and try to increase your demo portfolio value with your deals.
Once you understand how to work with your strategy in the best way, and how to minimize all possible risks – you can start trading with real funds.
Now you are pretty good at real trading, what is next?
The market is never the same, so in order to be «on a high wave» you should always be on top of these changes and modify the trading strategy you use. You do not need to test your innovations on the real balance, risking losing any additional cent. Instead, utilize the practice balance and find the strong and weak points of the strategy to make it work in the most efficient way.
Do not forget that different instruments and assets require different approaches. So, if you have a strategy for USD\EUR asset on a Forex instrument, it might not work the same way for EUR\GBP asset on a binary options instrument.
You may utilize a variety of different indicators both on the practice and real balances.
For example, for short-term trading, you can try using the Parabolic SAR and Alligator indicators combination. The idea is to catch the price reverse when both Parabolic SAR and Alligator change their direction and open the deal in that new direction as well. The best time to open the deal is at the beginning of the reverse and close it by its end.
For long-term positions, for instance, you can add Fibonacci Lines Graphical Tools. To work with this tool you need to point out the lowest and the highest prices of the asset. Analyze what lines are support and resistance for the chosen period. Once it breaks the support line – it is time to open a deal in the opposite direction. Do not forget to track the price movement and correct the support and resistance lines if needed.
Want to try something new?
It is unavoidable that one day you will think about other assets or instruments to trade even if you are satisfied with the asset you have chosen at the beginning. With the practice balance, you can explore the unknown area. Turn the demo balance on and give a new asset a try. Observe the price movement history, apply your favorite indicators, and open a deal. If you do not like that asset after a few tries, then you can harmlessly try another one without any losses for your real balance.
The more you practice the less your potential losses
Practice balance lets a trader have a chance to avoid trading failures on the real balance. It is better to make mistakes on the practice balance and find their core reasons without real losses. Regardless of the time you have dedicated to trading, do not forget to practice. Even though the balance for the practice account is demo – the experience you get is real!