Putting 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 or 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, 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 this section. There are many ways
to start and many ways to start wrong. Many traders start with too much money and too
much leverage and quickly get caught in major drawdowns.
There is a better way that persons with various degrees of available trading capital
can use. This section provides guidance on the essential ways of getting started and
achieving adequate preparation.




By Abe Cofnas