Do Not Underestimate Demo Trading


By Darrell Martin

Many times new traders want to know what amount is good for an initial balance. When you are learning, the best advice is to start out demo trading, as it is the cheapest forgiver of all mistakes. Do not underestimate demo trading. Trade it as you would your live account, including the size of your entries and exits.

Try It for 20 Days

Make sure that you can follow your rules and proper risk management for 20 trading days straight. If you break your rules, then the 20 days start over. This adds an emotional element to demo trading because everyone wants to make money trading.


Trading like this for 20 days forces you to be disciplined before you put money at risk, yet it will penalize you for not following the rules. The greed factor wants to just trade live as quickly as possible so you can make money. This makes the 20-day trial emotional when losses happen or when rules are broken. If you can follow your rules, using proper risk management, trading the same size you are going to begin trading with, for 20 days straight and be profitable, then you can determine if you’re confident enough to trade a live account. Prove to yourself that you have the discipline before you put your money at risk.

Spreads or Binary Options?

Trading binary options are very easy to learn but much more complex to trade consistently, especially if you are new to trading. Spreads may seem more complex, but once learned, they are much easier to trade, control risk and maximize profits with a variable settlement verses an all or none of the binary option.

Great News!

Nadex, the North American Derivatives Exchange is a US exchange, based in Chicago. It is regulated by the CFTC (Commodity Futures Trading Commission) and offers both demo and live trades. Nadex demo accounts last 40 years! It is considered a lifetime demo account.

The key, develop a trading plan, follow your trading rules and become a disciplined trader.