See a piece of the report from my Tradervue on my first week of trading: 3 days of profit out of 3.
Why? Because nothing changed from the way I traded during the Challenge! Why would have? If I won the Gauntlet challenge with Earn2Trade there is no reason to change anything whatsoever in trading the funded account!
Therefore I made over 1k $ in the first week, while still working a part-time job, and trading just 3 days! And without stress: how satisfactory is that!
Subsequently let’s go through a good analysis on paper vs demo vs challenge trading.
I differentiate between Paper trading and Demo Trading in this way:
Paper trading is when you literally use paper and pen to enter your trades on a piece of paper!
The problem here is: you may put down unrealistic trades, unaccurate, and tend to ignore the bad trades (even avoid to report them?) while giving extra importante on the good ones! Besides, it takes too much time to write it down.
Time that would be put to best use in a Trading Journal for example.
Read how the Trading Journal will rescue your savings!
Great video with a quick explanation. (I’m not recommending spread betting nor I’m affiliated in any way)
Demo trading is when you use a real platform to insert trades but on a simulated market environment: hence you don’t risk any money whatsoever!
The advantage when compared to paper trading is that you use a proper trading platform, with fees and exact profit and loss performance results, so you become accurate and gain in practice with real trading tools; even if you try to ignore the trades everything is accounted for, with precision, and in front of your eyes all the time.
Very important for Forex: there is slippage as well! You may not account for it in paper, but demo will! Here is the explanation to your next question: what’s slippage?
From my point of view Demo trading is indispensable! And yet it can hurt you because you may distance yourself from a professional approach to risk management and instead dumb it down to gambling! Be very careful to this!
As explained by Tradeciety trading in demo too long can even be dangerous for your overall development as a trader!
Why? Demo-trading is usually seen as a way of verifying that you can make money with your trading strategy before you start trading your actual money. However, you will never be able to translate successful demo-trading into trading real money. The reason is simple. If there is no money on the line, you eliminate one of the most important variables that affect trading decisions: the psychological pressure of risking your own money!
Another criticism of trading with a forex demo account is that when traders finally start to trade with a live account, they find themselves unprepared for the high-pressure atmosphere of genuine currency trading, resulting in them being unable to deal with the emotions they feel, article here by FXCC.com
Don’t believe me? Hear it from the people! in this post on BabyPips Blog: 1 trade, 2 winning accounts in demo and 1 real in loss!
As clarified in this Learntotradethemarket article nobody is telling you not to use Demo trading in your learning process but after 3 months or so of this you should have earned enough practice and familiarity with the tools.
Yet you may not have found a winning strategy! But if you do, then it’s time to move on to the Challenges and obtain funding for yourself!
Our mantra here at Funded Trader is: NEVER RISK YOUR SAVINGS!
It’s true that in Forex you may open a very small account with real money, say 500$ and use leverage, but there is also the risk that once this is open you will get undisciplined and put in more and more money (ehm…I’m guilty!)
While to open a Futures account is too expensive: you will need larger funds, at least 10K $ or so, while on Forex data are free here you need to pay CME 110$ data fees per product!
The best of all worlds is and remains: participating in a Challenge!
1- it still is Demo trading: you don’t risk your savings.
2- by paying the subscription fee you have enough skin in the game to trade cautiously, or better, professionally!
3- once you win you obtain funding! So your hard work will have this great outcome! Now you are a Funded Trader.
4- your trading strategy doesn’t change a bit, hence remain profitable, and so should you and your trading psichology!
5- obviously you keep working with your Trading Journal as always! Very important!