Part IIIPutting It Together
At some point in time, you need to transition from observing the market and acquiring knowledge to applying that knowledge in putting on real trades. Some accelerate the process by quickly opening a forex account and beginning to trade. Many start a demo, also known as a virtual account, and then proceed to trade. Both approaches are deeply flawed. Immediately starting a real-dollar account provides the realism of facing emotions in real trading, but the result is usually large and quick drawdowns. Those using demo accounts often experience beginner's exuberance by putting on trades with large lots; they achieve profits, only to see their real trading totally disconnected from the successes in simulation.
The point is not that it is wrong to go and trade with a real account as soon as possible, nor that it is wrong to simulate trades. The common flaw is that of inadequate preparation. One does not go into war without training, and one should not start trading forex without appropriate training. The shift into live trading should follow several milestones of phases that enable a constant cycle of learning, pattern recognition, and risk management. Even the best traders never stop learning.
How to get ready to trade is the overall theme of Part III. We explore a better use of demo accounts as well as providing a 100-question test of your forex IQ.
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