Top 5 Questions to Ask Yourself Before You Open A Live Trading Account

Top 5 Questions to Ask Yourself Before You Open A Live Trading Account

Have you been on demo or paper trades for a while, and are you ready to transition to the next stage in trading, live trading? Then there are essential questions you need to ask yourself.

Opening your first trading account as a beginner can be very exciting, as you are eager to start and make money with your newfound knowledge.

It isn’t wrong to be ambitious, but entering live trading too early into your trading journey can be your biggest mistake. You might even lose confidence in your trading abilities because losing money as soon as you start trading might make you feel you are not good enough or not ready for the world of trading.  

Contrary to paper trading, the fear of losing real money can influence your decision-making and make you hold onto trades even though the trading system is clearly telling you to exit.

So before you decide to retire your demo account and see your balance in flames, it is advisable to answer these crucial questions.

5 Important Questions You Need to Answer Before You Open A Live Trading Account

1.      Are You Truly Ready?

Yes, you have read several articles and taken many demo trades, but you must ask yourself if you are genuinely ready to start live trading.

As a beginner, remember that trading is a new prospect for you, and you are naturally eager to take on the challenge; however, this does not mean you are ready.

If you doubt your abilities after this question, you must stick to demo trading for a little longer until you improve your competence. You can also take online quizzes to test your knowledge if you are unsure of where you stand.

Do not get me wrong; you can’t be overly sure of yourself since you haven’t taken any trade before. It is usual for fear to set in. However, the human mind has a way of warning us against impending failure. That is why it is essential to ask and answer this question sincerely.

2.      What Is Your Trading Goal?

It is always advisable to start a journey with a goal in mind. Trading is a journey, so like every journey human takes, you need to set a clear and measurable goal at the beginning. Trading isn’t all about great insights but more about discipline, which can only come from setting clear-cut trading goals for yourself.

There are no templates for trading goals; you customize them according to your unique requirements – making a high return on investment is usually the primary goal for every trader.

In addition, external goals such as having a balanced lifestyle, creating more time to do your passions, and improving your performance can play a role in the success of your trading business.

People who follow a systemic approach in trading are usually more successful than those who don’t. This is because they have a pattern they follow that serves as a guide for them.

Also, ensure that your goals are realistic. Do not set high goals that will pressure you to make bad decisions.

3.      Do You Have A Trading Plan?

A strictly-followed trading plan will keep you in check and prevent you from making haphazard trades. Focus is a core part of trading, and having a trading plan will help you stay focused on the market. It is general knowledge that focused people tend to be more successful.

When you stick to your trading plan, the emotions of fear and greed will be removed from your decision-making. A trading plan will give you directions on your entry and exit strategy, how much risk you can take, the preferable time of the day to trade, etc.

4.      Are You Ready to Lose Money?

This is an important question most traders don’t want to answer. Some even think they have the answer to this question until they make their first loss.

There are chances that your plans for the trade might go wrong, no matter how much analysis you do. Therefore, you should decide how much money you will lose to protect your account.

No one controls the market, and there is no way to predict what the market will do in the long term. So even technical analysis of the market can be wrong.

As you begin trading, the loss is part of what you have signed up for. Deciding on the maximum amount you are willing to lose will give you control over the market and save you from trading heartbreaks. You can also set a stop loss to protect you from making a significant loss.

5.      How Do You Plan to Review Your Trading History?

Many traders overlook this aspect simply because they don’t know how to keep a record. Reviewing your trading history will help to understand your trading pattern, which will help with future decision-making.

If you are trading as an investment, you will always want to analyze your trading history to review your investment’s performance. You can look at your trading history at the end of each trading day to monitor your trading history, and your profit and loss margin and prepare for the next trading day.

3 Important Things You Need to Know Before You Open A Live Trading Account

1.      Being Successful in Trading Is Not About Being Right or Having a High Winning Percentage

Many traders who are just starting think they must win every trade to be profitable, but they are wrong.

Losing trades can become an ego thing for some traders. They believe they have unique abilities that no one else has, and this causes them to get too concerned with winning percentages. As a result, these traders try to have as few losing trades as possible.

These traders fail to understand that the key to success in the market is not about reducing the number of trades you lose. Instead, it is about minimizing the amount you fail to trade. Success in trading depends more on capital preservation and risk management than anything else.

2.      Your Trading Strategy Is Too Complicated If You Can’t Easily Explain It To A 10-Year-Old.

Ensure you knew what you were doing before you opened a live trading account. However, more importantly, adopt a simple, easily explainable trading strategy that you can make sense of.

A complicated trading strategy can also mean complex trading. Try to simplify your strategy to make things easy. You do not need a rough chart before you can make consistent profits.

3.      Ensure You Want to Be A Trader Because You Love Trading

Many people enter the trading business because their friends are trading. Trading can seem easy, but it takes someone with a strong passion and interest to excel at it.

You must be immune to losing before you can succeed in trading. You also have to have a lot of patience to wait for your trading strategy to show itself before you trade. And all of these are by-products of you first loving the “venture.”

Conclusion

If your answers to the questions above are affirmative, you are ready to take on live trading! In addition, your answers to these questions show how prepared you are to start your trading journey.

However, if your answers to these questions are mostly “No” or your answers are feeble, you should reconsider going live. Demo Trading is another option you can opt for. In demo trading, you can trade with virtual cash with zero loss. Demo trading is there to help practice proper discipline and strict risk management rules.

There is no shame in starting with a demo account. Most experts in trading first honed and developed their skills with trading demos.

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