Practice does not make perfect.
We see it all the time, new traders performing extremely well using a demo account only to fail miserably when they switch to a live account. The obvious reason is that with a demo account there is no emotion and pressure.
Too many traders believe that back testing and trading on a demo account are going to greatly enhance their probability of success and they often drag out the old phrase “practice makes perfect”.
The real answer is that perfect practice makes perfect performance and this is simply impossible when back testing and trading with a demo account. Real money trading puts your mind in the real world stressful conditions that you need to gain the experience to trade successfully. It’s not the trading system that will likely see you succeed or fail, it’s you!
How you handle the real world stressful situations you will find yourself in when trading a real account. There is no holy grail, most trading systems that you have learned have an edge and the question is can you trade the edge properly in the real world live account market conditions. The market won’t change when you go from demo to live, but your mindset will change and it’s learning to develop the “live traders” mindset that will set you apart.
- Find an edge.
- Apply the edge.
- Replicate it every time it presents.
It’s a simple process.
Adapted from – Andrew Barnett
Bharat Jhunjhunwala MFTA, CMT, CFTe, MSTA