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Module 2: Setting up as a Trader

This is a guide to creating your own trading room. It covers topics such as selecting a good broker and provides a list of reviewed and recommended brokers. It also discusses the differences between demo and live trading, the psychological effects of demo trading, and the benefits of demo trading. Additionally, the guide provides information on setting up your MT4/5 trading wallets and configuring them with your MT4/5 accounts.

Table of Contents

Success in Forex trading requires more than just knowledge. Other crucial factors include psychological well-being, sufficient time to trade, and a conducive workspace or environment. 

Although having an ideal trading space is not crucial when starting, setting up a proper trading desk for day trading is essential.

Creating Your Trading Room

You can start your trading career anywhere, even from the comfort of your bedroom or sitting room. 

However, having a dedicated workspace can make all the difference as you progress in your trading skills. 

Here are some tips for creating a professional trading room at home;

– Invest in quality furniture, including a comfortable office desk and chair.

– Ensure good lighting, with access to natural light if possible

– Set ground rules for who can access your trading room.

– Create a trading library with a bookshelf to store helpful resources

– Keep the room comfortable with air conditioning

– Prioritize physical fitness by including a treadmill for exercise

– Stay up-to-date on the latest news by including a TV for easy access to information, especially for fundamental trading.

Having multiple monitors does not guarantee success in trading.

However, as an advanced professional trader, you would need several monitors depending on what you want to do with them.

Selecting a Good Broker

Choosing the right broker is one of your most critical decisions as a trader. 

Your broker will act as your intermediary in the market, executing trades on your behalf and providing critical support and resources to help you achieve your trading goals. 

So, you need to choose a reputable and reliable broker. 

Here are some key factors you must consider when choosing a good broker:

1. Regulation: Look for brokers regulated by reputable financial authorities in their respective countries. This ensures they operate within guidelines and standards to protect clients.

2. Trading platform: Check if the broker offers a trading platform that is user-friendly, reliable, and equipped with the necessary tools and features.

3. Fees and commissions: Compare fees and commissions across different brokers to ensure you’re not overpaying.

4. Customer support: Look for brokers that offer good customer support, including timely responses to queries and issues.

5. Security: Check the broker’s security measures, including personal and financial information encryption and account protection.

6. Deposit and withdrawal options: Ensure the broker offers convenient deposit and withdrawal options that suit your needs.

7. Reputation: Research and check reviews and ratings from other traders to gauge the broker’s reputation.

8. Account minimum: You can find plenty of highly ranked brokers with no to a small account minimum. For instance, Deriv allows a minimum deposit of $5 or $10 depending on the deposit method (for synthetic & volatility trading). Exness allows a minimum deposit of $10 (for currency & crypto trading).

Reviewed & Recommended Brokers

» We have done a detailed analysis and guidance on the best broker you should use in our blog. Jump to our picks for the best brokers for every investment you want.

Demo vs. Live Trading

When it comes to trading, you can use either Real accounts, which involve actual funds, or Demo accounts, which use virtual money with no real value. Demo accounts offer the same market conditions as Real accounts, making them a useful tool for testing trading strategies. 

Nonetheless, a trader’s primary emotional difficulties stem solely from the financial stakes. Therefore, it is not advisable for novice traders to rely too heavily on Demo accounts for the practice. While price analysis and identifying favorable opportunities are essential skills, they are not a trader’s main challenges. 

This Demo vs Real Trading blog has more ideas for your in-depth learning.

Here is a short checklist of the things demo trading can’t prepare you for;

– The need to exercise patience and wait for the opportune moment to enter a trade.

– Coping with the pressure and uncertainty that can arise once you have entered a trade.

– Managing the emotions that often lead to holding onto losses for too long or exiting profitable trades too soon.

– Resisting the urge to enter trades too early due to FOMO (fear of missing out) or the desire to make more money.

– Balancing the aversion to losing money with the need to capitalize on good trading opportunities.

– Avoid excessive greed when exiting a trade, as this can cause traders to miss out on potential profits.

Some traders may suggest that the key to achieving optimal results with demo trading is approaching it as if it were real money. However, this may not be possible since You will ALWAYS know that it’s just demo trading.

Psychological Effects of Demo Trading

– Lack of emotional investment since demo accounts offer a substantial virtual fund.

– No tangible repercussions as demo trading take place in a risk-free environment.

– Overtrading tendency due to the availability of ample virtual funds can lead to the development of harmful habits that do not align with a trader’s risk management strategy.

Benefits of Demo Trading

Although demo trading has its drawbacks, it can still be an excellent starting point for trading when you use it appropriately.

So, if you are a  novice trader, it is highly recommended to begin trading on a demo account before transitioning to a live trading account.

Even experienced traders may find value in manually using demo accounts to test new trading strategies.

Demo trading benefits, therefore, include;

Getting Started with Trading: Get to see price-chart, how charts behave on different timeframes, learn how to identify supply and demands, support and resistance and where to place market orders with stop-loss and take-profit levels

Get to Know the Trading Platform: Get familiar with your trading platform and get used to all the features of your platform, so you don’t have to look around once you start trading with real money.

Understanding Order Types: Demo accounts will help you experiment with different order types to learn how they work, such as buy stops, sell stops, buy limits, sell limits, OCO, and trailing stops. 

Back-Testing a Trading System: If you are an experienced trader, you can also use demo accounts to back-test your new trading system before using it on your real account. 

Don’t Stay Tooooooo Long on a DEMO Account!

As a beginner in the Forex market, it would be a mistake to rely solely on demo trading for too long. 

Although demo trading can help you learn the basics of trading, it lacks the emotional connection you have with real funds. This can lead to poor decision-making, which may not trigger the same emotional response as losing money on a real account. 

Additionally, demo trading doesn’t provide the same consequences as actual trading, making it difficult to understand the importance of sound risk management.

Therefore, sticking to demo trading for a long may be more harmful than beneficial. Once you have a good understanding of the market and your trading platform, it’s recommended to open a real account and start trading with real money. 

Depending on your learning curve, it may take a few weeks to a few months to master trading on a real account. 

However, with commitment and proper guidance, you can build your confidence and market psychology with sound risk management.

Our intermediate and advanced courses offer guidance on practicing trading with as little as $10 on a real account. 

This way, you can gain valuable experience and improve your skills while minimizing risk.

Setting up your MT4/5 Trading Wallets & Configuring your Trading Wallets with MT4/5 Accounts

Some helpful links to help you get started include;

https://www.metatrader4.com/en/trading-platform/help/userguide/open_an_account

https://www.metatrader5.com/en/mobile-trading/android/help/chart

 

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