The demo account is often used in a very wrong way. People don’t even realize the importance of a demo trading account. As a currency trader, you are given access to the free trading platform so that you can learn new things. The majority of the UK traders spend time creating a fancy trading system. But it is not the perfect way to develop a trading method. You have to learn the use of premium tools and only then it will be possible to create a perfect trading method. Though things will be tough at the initial stage once you know the key things to learn, it won’t take much time to create the perfect trading method.
You need to use the line tool first. The use of line tools can help you to find the perfect support and resistance level. In fact, you can find the trend of the market using them. Getting busy with the indicators and other variables is not going to work unless you develop the ability to find support and resistance. In a nutshell, the line tool is used to draw the pivot levels. These are the most important levels and are where you will take the trades.
Knowing the basic indicators
There are two basic types of indicator that you need to learn about at the initial stage. First of all, learn about the moving average. It’s more like finding the dynamic support level. Try different period settings in the moving average and see which one works best. In general, the 100 and 200 daily moving average tends to work fine. Once you have learned about the basic moving average, start learning about the oscillators. It will help you to find the overbought and oversold state of the market.
Learn to analyze multiple time frame
Analyzing the multiple time frame is very critical to your success. You can’t take good trades unless you learn to do it in an effective manner. For doing the multiple time frame analysis, you will also need a good broker. To get more info about Saxo, which is a high-end broker, you can visit their website. After you have access to the best platform, you can start studying different time frame data and see which works best. Though it will be a little hectic it won’t take more than a month to learn multiple time frame analysis.
Creating the trading method
After knowing the basics, it’s time to create a trading strategy. Try to combine the line tools and the indicators to create a well-balanced trading system. Though you might get confused at the initial stage with such an approach it is really very easy. Once you start taking the trades with the combination of these tools, you might be able to make a regular profit on the demo platform. This is when you have a decent trading method. But jumping into the real market is requires back-testing of the trading method. And the back-testing needs to be done in a very vigorous way.
Back-testing the strategy
The demo account is an amazing platform to back-test a trading method. Unless you have access to the demo account, it would have been impossible to find the faults in the system without losing any real money. But the demo account gives you the ultimate freedom to test any trading method. You need to execute a minimum of 30 trades to back-test the system. Pro traders consider 50 trades as a standard bench market for back-testing a trading method. In the back-testing process, you might find some errors in the system. Note the errors and fix those problems. Without fixing those issues, you should never try to trade in the real market. Prepare yourself with the help of a practice or demo account.