If you start a trading career, without the right foundation, it is a bit like going into a casino. You place a bet, based on a gut feeling alone, and hope for the best. The key to success, as a CFD trader, is in testing, practising and education. But, what kind of options are available to you?
Before you start trading with real money, you should always practise with a demo account. The idea is simple – you recreate the experience of real-time trading, to learn how everything works, using virtual money. Many experienced traders still use demo accounts today, when trying out and implementing new ideas and strategies.
Most demo accounts have a range of features you can use including:
• Explore a variety of financial markets available and learn how they work.
• Practice with opening and closing positions, learn how deal ticket works, how to apply stops and limits and track profit and loss as well as learn about margin requirements.
• Learn to read and analyse charts and try out technical indicators to find your preferred configuration.
• Create watchlists for markets you are interested in.
• Look at past activity on your account to see what worked well and what didn’t.
• Get the latest news feeds and market data to plan your strategy and spot potential trading opportunities.
Differences from live accounts
There are differences between a demo and live account which you will need to understand so that you can transition from one to the other smoothly and efficiently.
One example being, demo trading accounts are a little behind the live accounts regarding the data and might not be subject to slippage, interest or dividend adjustments. You may also get access to advanced chart packages in a demo account, but some brokers may charge for these in a live account.
Deal rejection is something you will not encounter with a demo account but will experience with a live trade. The price can change, seconds before you submit your trade and execute it, and the trade can be rejected. It isn’t something you usually see with a demo account.
Trading with virtual money can lead to developing the wrong mindset. It is not real money and therefore you may find it hard to adjust when you switch to a live account. Therefore, it is important to treat it as if it were real money, to create that right mindset.
Other educational resources
When you are considering using a trading platform, why not take a look at the educational resources on offer to you in addition to a demo account. Video tutorials, FAQs, a glossary and a series of educational articles can all be beneficial material when you are learning.
You can even talk to other traders and look for mentorship programs where experienced traders offer their help and assistance to others looking to start out in the industry. Some companies host seminars and workshops around the country where you can sign up and hear people talk about trading as well as learn many of the fundamental basics.
Make sure you sign up for newsletters and blogs that cover the industry, as this can also help you learn about what affects the industry and what changes are happening.
GCC Investing offers a demo account facility for users to learn and practice their trades before using the real thing. There is also a variety of educational materials available on the website for anyone to use that can help you build up a better understanding of CFD trading before you bring any real money into the process.