Forex Paper Trading- Baby Steps To Success

When you were a kid, like all toddlers, you cant possibly stand on your own and walk by yourself

. Your parents would encourage you by giving you a helping hand and assist you by first stimulating your leg muscles. As your leg muscles grow accustomed to supporting your own weight, you will start the proper ritual of walking on your own. This is akin to having a forex paper trading account before going into live account.

Having a paper trading account is more than just handling virtual money only. It is actually an aid to put you through different tests to allow you to be ready for the live environment. Why do I say that? Normally a novice trader will just take for granted the virtual credit used in the paper account and that if one account is blown, he can replaced it with another at no extra cost.

The act of constantly blowing account and replacing it will only just be compounding the misconception that it is ok that if the account can be blown as long as its money one can afford to lose. In the long term, it will just only serve to hurt the traders trading experience, thinking that losing is part and parcel of trading.

Yes, losing is inevitable at some point of trading but not at the expense of the whole account. Taking calculated losses will be the smart thing to do, a loss that is well within forecasted by your own trading plan. It is like having a huge battalion of soldiers out there fighting but when the time comes for a retreat, the loss you take is tolerable and you can survive another day for another fight at the battlefield.

Starting off in paper trading allows you to train formulating a strategy to tackle the market. Formulating a strategy by itself will consist of assessing the market condition, decide on what kind of strategy is suitable, developing entry and exit plans.

Paper trading focuses on your discipline level to follow through your plan whatever takes place and control of your emotions. The ability to handle your money even if it is virtual money will greatly be tested. If the way you handle virtual money is too flippant, you may also guess that how you will handle your real money on the live account will be.

Paper trading allows you to explore the mistakes you have made and these are to serve as important lessons in preparation for live trading. A traders greatest weapon which is a traders mindset will be honed throughout forex paper trading and if equipped with the right tools, together you can your trading goals successfully.

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by: Warren Seah

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