Setting up a Demo Account

 

Video Transcription:

Hey traders, welcome to Video 3 of the Forex Beginners Course. This is Cory
Mitchell. In this video we are looking at why you should set up a demo
account and how to do it brought to you by Investoo.com.

So, you should never start trading with real money right away. Always start
trading with a demo account. This way you know if what you’re doing is
working or not. You can apply strategies to it, see what works, what
doesn’t, what makes you money, what loses you money. And it’s a much better
way than just jumping in with real money and losing a bunch of real money
right off the bat.

Any time we switch brokers . . . so once you’re a little more established
and you eventually decide to switch to a different broker, also make sure
that you always try out the new broker’s demo account before just
switching. That way you know exactly how the software works, what their
sort of trading conditions are, commissions, all that sort of stuff. You
can see it happening in the demo account. So there are no surprises when
you start trading with real money.

All brokers should offer a demo account. If they don’t, that’s somewhat
suspicious. So, once we go through, at the end, I’ll show you how to open a
demo account. You’re going to find a broker, open a demo account with them,
just to see how it works.

So demo accounts are good and will show you whether a strategy is working
or not. You can see whether you’re profitable or if you’re losing money.
But trading is mostly psychological. A demo account won’t create the stress
that you’ll feel with real money on the line.

Once you make that switch to real money from the demo account, it’s going
to be a bit of a different world. Again, that said, the demo account is the
closest thing we have, so it is a good tool and you should use it. But just
know that when you go from demo trading to live trading, it may not be a
completely smooth transition.

If you were profitable in the demo account, recreating that in a live
trading environment can be difficult just because it is more stressful.
There are more things to, not things that we need to think about, but our
mind, just because we have money on the line, starts to make some changes
that we weren’t doing in the demo accounts. We have got to be aware of
that. But, do use a demo account because you’re going to build habits in
the demo account which can help you when you switch to live trading.

Also, make it as realistic as possible. This is your time to exercise, to
find different strategies, to work on your trading. So make it as realistic
as possible. When you open the demo account, open it from an amount similar
to what you’ll be eventually trading with.

If you’re planning on eventually opening a live trading account and you
have about $10,000 to trade with, don’t open a demo account for $1 million.
Because that is a completely different scenario than what you’ll eventually
be trading under. So if you have $1,000, open a demo account for $1,000. If
you think you’ll have about $5,000 to trade with, open a demo account for
$5,000, and so on.

Also, pretend the trades are actual, real money. So opening it for $10,000,
if you have $10,000 to trade with, will make it slightly more realistic.

Don’t do things that you wouldn’t do in real life. So, a lot of guys will
open a demo account, they’ll open a trade, and they’re willing to lose
their whole $10,000 or $50,000 or whatever it is on that one trade. Don’t
do that. Pretend that it is real money. Would you really be willing to lose
that much on a single trade? No, you should have strategies in place to
limit your risks. So make it as real as possible.

The more you put in to it, the more you get out of it, eventually.

So what you do in the demo account will create habits, good or bad. So,
make them good habits so that when you go to live trading, that transition
will be much smoother. In the example I just gave you, if you continually
let your losses get huge, hoping that it will eventually recover, that is
developing a bad habit. You want to have a strategy for managing that sort
of stuff, which we’re going to cover in future videos.

So always try to make good habits, even when you’re trading in a demo
account. It’s not real money, we know that, but you want to have good
habits in that demo account. So when you make the switch to live, it makes
it much easier.

Okay, so, setting up a demo account. I just have one broker up here OANDA,
you don’t have to use this one, but they do offer a free demo platform.
Right on their homepage you can just go try a free demo account.

So what you’ll do is you’ll fill out this information, wherever you are.
Make sure the information is accurate. At least for sure make your email
address accurate because that is where you’re going to receive the
information for your account.

So, what’s going to happen is you’re going to fill this out, you’re going
to register, you’re going to get an email with a whole bunch of steps for
you to get your demo account going. One of those steps will be to download
a trading platform. That will be included in your email but you can also
just go right on the site under platforms. And we can see here, simply
download the OANDA MetaTrader software.

So, MetaTrader, I chose this one because a lot of brokers use it. And
MetaTrader 4 is a very popular forex trading platform. So once you have it
installed you can open different demo accounts, and you’ll be used to the
software already.

So you’ll download this, install it on your computer, and by then you’ll
have had your email from OANDA giving you the information for your account.
The first time you open MetaTrader, it is going to give you a little pop up
box where you’re going to have to type in a bit of information. That’s when
you get to choose how much money you want to put in the accounts. Remember,
try to make it realistic. And then, if you already have it you can just go
login and input your login credentials that were sent in the email.

That should allow you to open up your software and see live charts. So here
I have one up, and then you can set it up however you want.

In future videos we’re going to go through a MetaTrader tutorial where I’m
going to guide you through some of the features of MetaTrader. But for now
I just want you to get logged in, familiarize yourself a bit with the
overall look and feel of the software so that when, in the next videos, as
we start to advance, you’ll be able to follow along with your own software
and be able to see exactly what we’re doing.

So, for right now, try to open up a demo account. That way you can actually
get in there to trade. Make a few trades. See how the forex market actually
works. You can review some of the former videos to see the basics of forex
trading. And just get in there and see what it’s like.

So until then, happy trading.

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