THE TRADER'S LOUNGE

WHY YOU
SHOULD
NEVER
TRADE A
DEMO
ACCOUNT
9 JANUARY 2018
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INTRODUCTION

Before we get on to the reasons why you should never trade a demo account, let me briefly explain what a
demo account and demo trading is.

A DEMO ACCOUNT is a type of account offered by a broker (the middleman between the seller and the
buyer) which is funded with FAKE MONEY.

DEMO TRADING is a type of trading where the novice trader opens a demo account with a broker and trades
FAKE MONEY in the financial markets without ever having the ability to WITHDRAW their PROFITS from the
financial markets

lets get into the reasons why you should never trade a demo account.
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1) FAKE PSYCHOLOGY

One of the major reason why you should never trade a DEMO account is that it develops a FAKE
psychology within you. PSYCHOLOGY plays a major role in the life of a trader, its one of the key
elements that separate a novice trader to the professional trader.

The human mind is quite interesting, it tend to careless on the intangibles.

What most novice traders do when they demo trade is that they tend to an "I DON'T CARE ATTITUDE" to
their demo account inherently because the account is funded with FAKE MONEY so when they place a
trade they never get that adrenaline rush. They will probably place the trade and let it be, when the
trade goes south they will not have an emotional attachment to the trade. Instead of reviewing what
they did wrong or why the trade went in the opposite direction, the demo trader will instead open
another demo account FUNDED it with FAKE MONEY and continue to trade.

That is why a demo trader will never develop the art and the skill of trading.

HOW ABOUT IF THEY MAKES PROFITS?

Allow me to ask you a question. WHY DO YOU WANT TO MAKE MONEY THAT YOU CANNOT WITHDRAW
AND SPEND?

The demo trader is the only person in the world that loves to make FAKE MONEY. STUDIES have shown
that most demo traders can make money on their demo accounts but they tend to replicate that same
skill in a real account. this is due to the fact that a demo account deceives a person's character, you
might think you are a patient person with a demo account but when you move to a live account you will
learn that you are actually the opposite.

The only way you can develop as a trader is by trading a live account.

 
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2)FAKE EXPERIENCE

Allow me once again to pose a question.

WOULD YOU ALLOW A DOCTOR WHO HAS NEVER CARRIED OUT A HEART SURGERY TO OPERATE A HEART
SURGERY ON YOU?

Certainly NO!!!

so why do you wanna take the same risk in your trading. most novice traders tend to think that they are
gaining experience by trading a demo account.

that is absolutely not TRUE!!!!. you don't gain experience by not performing the surgery, you will never gain
trading experience if you have never trade live before. the proof is allows in the pudding and not in the
flamboyant talk!!

A demo account does more harm than GOOD, I strictly believe the biggest FRAUD in trading is a
DEMO ACCOUNT.

In this industry the only way you grow as a trader is by trading a live account  
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3)PRICE FEEDS

Studies have shown that most novice traders that trade demo accounts are most likely to make money
when trading demo accounts but fail to do so when they trade live accounts.

BUT WHY IS THAT SO?

The major reason for that apart from the other reasons is that in the financial markets there are price feeds.
In a real or live account there are multiple price feeds which then sum up to the overall price hence thats
why there are so many price fluctuations within at any given time whereas for a demo account there is only
one price feed as a result price fluctuation are less on a demo account as compared to a live account.

so when a demo trader now jumps onto a live account they tend to panic because of the rapid fluctuations
of price. this leads to indiscipline behavior such as closing a trade prematurely in profit or loss because of a
simple retracement in price. this really shows that the demo trader has no strategy at all. he is just doing
guess work and yet trading is not suppose to be that.

IN CONCLUSION

always trade a live account if you want to develop the art and skill of trading. a professional trader is a
professional trader by his real account.