5 ways to tell if you are ready to open a live trading account

So you’ve been trading on a demo account for months and you think you’re ready to go live. But are you really ready?

Here are five signs you should look for:

1. You can make profits CONSISTENTLY.

Making consistent profits and winning ALL the time are not the same. There is not a single famous forex trader who can say that he has not lost a single trade in his entire trading career. Given the ever-changing market conditions, losing is part of the struggle.

So if you’ve lost a trade or two this week, don’t beat yourself up. Rather, focus on honing your skills in finding high-probability setups with decent risk-reward ratios and coming up with strategies that will help you minimize your losses and maximize your wins.

Make sure you also monitor your profitability in your demo account every month. That way, you’ll know if you’re on the right track and it’ll be easier to see what you need to work on.

2. Have clear risk management rules that you follow at all times.

They say that 50% of your trading success is determined by your ability to find good setups. The other 50% is based on proper risk management.

That said, having a well thought out set of risk management rules is also a must on my checklist.

There are times when the market goes crazy, which makes you doubt your analytical and trading skills. During these times that test your mental toughness, your risk management plan may be the only thing that could protect your account.

Before you even start thinking about going live, you should make sure you have a well-defined set of rules that tell you when you’ve lost enough or traded too much, or else you’ll just wreck yourself.

If you haven’t introduced your risk management rules yet, you can start by including percentage risk, the maximum drawdown you can tolerate, and when to stop trading after a losing streak in your trading log.

3. Don’t lose your cool when your trade loses.

Still panicking when your trade goes against you? If you do, you might want to rethink investing your hard-earned moolah.

I know, I know, it’s not an easy task to keep your cool when you see yourself losing money. So what should you do? Make a detailed trading plan and follow it!

Having a plan to focus on will allow you to think clearly and assess what has changed in your trade since you saw the setup or if the fundamentals have changed to help you decide whether to hold or not.

4. Don’t take your losses too hard.

If you end up with a dent in your account, don’t be too hard on yourself, no matter how small or large the loss.

Instead, keep calm and identify what went wrong and what technical and fundamental factors affected your trade.

Keep in mind that such peace of mind is usually achieved not only when you properly plan your trades and calculate your risk in advance, but also after doing it consistently for a certain period of time. There is no substitute for achieving success but deliberate practice and gaining experience.

5. You are completely comfortable with your broker and trading platform.

Before you open an active account and risk real money on your trades, you should know very well the ins and outs of your trading platform. You don’t want to suddenly realize you don’t know how to get out of a trade just when you’re about to do it, do you?

Apart from that, you should be familiar with your broker’s slippage and regular pip spreads so that you can take them into account when placing orders.

This is why we encourage you to practice with a demo account from the same broker you intend to open a live account with.

Last but not least, you should be able to easily contact your broker if something goes wrong with your account. You will be entrusting them with your hard earned money after all.

Let me close with a small disclaimer: even if you can check off all the items on this list, it still won’t guarantee that your demo trading success will be replicated in your live account.

Remember that psychological factors will also come into play. This is why it is also important to build up your psychological capital before risking real money on your business ideas.