| Many times new traders who have done well in a | | | | But instead of getting filled at your price of 1.4000, you |
| demo account open up a live account and things start | | | | are filled at 1.3990 and now have a losing trade on |
| to fall apart. Having real money on the line is very | | | | your hands. Why? |
| different emotionally than trading pretend money. | | | | The answer is that there was nobody willing to take |
| When losing in a live account, every pip can result is | | | | the other side of the trade at your price. A trade is |
| feelings of frustration or pure joy. These emotions can | | | | when two people agree on price but disagree on |
| cause traders to make different trading decisions in | | | | value. One thinks the value is too high and the market |
| that live account than were made when trading in the | | | | should move down while the other thinks the value is |
| demo account. This usually leads to more losing trades. | | | | too low and the market should move up. When a |
| But trading live and making the same decisions when | | | | major economic number is released, the volume dries |
| no money was at risk is key to your success as a | | | | up as most big traders stand aside. They will not trade |
| trader. | | | | if they cannot identify their risk. So there is not as |
| No matter how hard you try, you cannot move up to | | | | much volume as you would see in a normal market |
| the next level of trading until you learn how to risk real | | | | environment. |
| money. That what trading is all about. The key is to | | | | However, there are still plenty of traders trying to take |
| open that live account and to start out slowly. | | | | advantage of the volatility. They will all want to trade in |
| In our Power Courses, where we teach people about | | | | the direction the market should take based on the |
| trading, we recommend new traders start out trading | | | | number released. So if everybody thinks that the |
| only one mini lot at a time. Keep your risk small in the | | | | market is going down, all these traders try to sell at the |
| beginning until you feel good about the decisions you | | | | same time. The problem is that there are not many |
| are making. | | | | traders looking to buy if the market is falling quickly. So |
| Trading in a demo will not help you practice this; you | | | | the market continues to fall until the buyers step in and |
| can only learn how to deal with this using real money. | | | | start taking the other side of the trades. But they are |
| But that does not mean you have to take on a lot of | | | | buying at their price, not yours. In the example above, a |
| risk to prove anything to anybody. You are just moving | | | | sell stop order becomes a market order once the |
| up to the next level of trading. Take your time, as the | | | | price designated is printed. So when the market traded |
| more practice you get trading live, the better chance | | | | down to your stop level of 1.4000, your order then |
| you have at being a profitable trader. | | | | became a market order. When you are selling at the |
| What is slippage? | | | | market you are matched up with somebody who is |
| You bought the EUR/USD at 1.4000 and the market is | | | | buying. If they are only buying below your sell stop |
| now trading at 1.4025. Since there is an economic | | | | price, you will be filled at that level. This is called |
| release due out in 15 minutes, you move your | | | | slippage and it is present in every market in the world. |
| protective stop up to 1.4000 to protect your winning | | | | So if you are trading in a volatile market environment, |
| trade from turning into a losing trade. The number is | | | | you have to be prepared for slippage. It is the nature |
| released and the market trades down through your | | | | of the game. |
| stop level to as low as 1.3975 in a matter of seconds. | | | | |