In today’s blog post, we are going to examine common mistakes encountered by participants of the trading contests, and ways to avoid them. You can apply these techniques not only when competing with the market or other traders for profit, but also when it comes to other life situations. They say it takes 21 days to form a habit. Try doing this too in order to excel not only at Forex, but life overall.
1. Demo Account Contest: Demonstrating that you are the best or winning the battle against yourself
2. Below are the three tips that can help you reach your goal
3. Main mistakes of the contest participants on demo accounts
4. Unexpected Tip
Demo Account Contest: Demonstrating that you are the best or winning the battle against yourself
Any contest fuels competitive spirit as every participant wishes to show best results and top-notch skills.
The situation with trading competitions is absolutely unique, since in order to snatch the profit, the trader has to compete not only with the market, but also with other contestants. To make your victory really meaningful, you have to look beyond this.
The point is that the Gerchik & Co trading contest is not just about testing the market waters in the environment which is close to reality. It offers a chance to receive investment that can help you build a trading career in the long run. This is the first step on the long path and whether or not it will be a successful one depends on your performance in the competition.
By demonstrating consistent profitability, you can attract investors and maximize your initial capital. In essence, your further success in no small part depends on how you achieve this goal. Against this backdrop, the question of how to win the competition is considered in a totally different context.
Below are the three tips that can help you reach your goal
1. Figure out what is more important to you. Is it to win no matter what it takes, even if it means breaking your own rules, or is it about gaining experience? Stability is a sign of solid skills. And the contest is a perfect launchpad for that, especially when there is no risk to lose even a penny.
2. If victory or the investment itself is the only thing that matters to you, try doing what some contestants do. Make the bare minimum of trades during the last days of the competition while keeping a close watch on your opponents. That being said, the best way to win is by trading carefully as if the money were actually real.
3. If you wish to put your knowledge to the test in the demo market which is close to the live market environment both in terms of order execution and fever pitch, make sure to keep your own trading and yourself in check. Remain cool even if you are nowhere near the prize-winning places at first.
You are gaining experience, testing out your strategy and trading plan. All of this will ensure consistent gains in the long run. Comprehensive approach is what will help you win the competition and, most importantly, make profits through live account trading in the future.
Main mistakes of the contest participants on demo accounts
Now let's take a closer look at the contestants’ most common mistakes that prevent them from building a flourishing trading career. Once you’ve identified them, you have to eliminate them in order to trade profitably and consistently in the financial markets.
1. No trading plan
Trading plan is one of the key pillars of successful trading. Chaotically made deals have never generated any substantial profits in the long term, so if you decide to enter the demo account contest, make sure to have a clear game plan and stick to it.
Forex trading should be based on one strategy, no matter how simple or complex it is. The key factor lies in its profitability. Plus, you need to have a clear understanding of the entry and exit criteria.
The trading plan must include at least:
- position opening criteria;
- stop loss placement;
- take profit point;
- outlined scenarios for early position exit.
Having clarity on these matters and following the rules of the trading plan are the key to both contest success and long-term trading victories.
Watch this short video to learn what else should be included in a trading plan
Create your own trading plan now
2. No risk and money management strategies
The risk and money management strategy are the second pillar of profitable Forex trading. Without them, you can lose your deposit in no time. The basic parameters that should be included in the strategy are:
- the size of the stop loss and take profit;
- risk per trade in the deposit currency;
- the volume to open a position with;
- the number of losing trades for the specific time period.
Why are these rules so essential? First and foremost, this is because emotions can significantly distort our perception and lead to wrong conclusions in the course of trading. Second of all, in situations where you have to make a quick decision and not miss a perfect deal, outlining the rules is the last thing you want to be doing.
The majority of conservative money management strategies suggest that the risk per trade must not exceed 1-2% in the deposit currency. The lot size is then calculated based on this figure. Even though the demo account contest involves virtual money, it is still essential to accurately calculate the lot size in order to make it to the list of the most successful contestants.
3. Emotions: friend or fiend
When wondering how to start trading Forex, the traders tend to overlook the fact that aside from competing with the market in the course of trading, you also compete with yourself. More often than not, traders experience the feelings of fear and greed. They get scared to lose money yet when you know what potential market has, you start wishing to earn more and more no matter what. Unsurprisingly this often results in violation of the trading plan and risk management rules.
It stands to mention that Gerchik & Co demo account should be used for a short period of time since this demotivates the traders. This happens because they stop being actual traders and turn into players who simply chase after the feeling of thrill. This is why the duration of the demo account contest is three months only - you need this much to test out the strategy, your own strengths and weaknesses, emotions and self-discipline. A good trader is someone who operates their own trading plan and risk management strategy. So, sticking to your own rules is the key task when trading in the financial markets.
That being said, successful trades would be impossible without fear and thrill because the emotions drive us.
But to find the right balance here, you should:
- clearly articulate your rules when you are calm so that the imliact of emotions is minimal;
- connect the Risk Manager solution and enter your liarameters there;
- follow the strategy when trading.
This is what puts you in the driver’s seat and doesn’t let your emotions have an upper hand over you amidst trading.
If you wish to see what would happen if you gave into thrill or fear and broke your own rules continuously, try the demo trading. Below are the three reasons why this is a great technique:
1. you do not put your money at risk in the course of the demo account contest;
2. you know exactly what you are losing;
3. you can track down how your gut feeling which goes against statistics and strategy helps or stands in the way of your gains.
In other words, you can experiment when it comes to trading contests. However, keep in mind that a comprehensive approach is the backbone of victory in the live market because, as we know, the trader’s main goal is to make money.