What do traders actually do?

Traders participate in financial markets by buying and selling stocks, futures, forex, and other securities, and by closing out positions with the intention of making small, frequent gains. Trading is in an auction style. Bidding and Offering . It becomes intensive when the markets open and close.

What Is a Trading Platform?

A trading platform is software used for trading: offering live price quotes, opening, closing, and managing market positions through an online broker.

Online trading platforms are frequently offered by brokers either for free or by collecting a minimum deposit for opening an account.

Basics of Trading Platform

A trading platform should have real-time quotes, charting tools and news feeds.

If you're still new to trading, you may just stick to practise how to execute trading transactions online.

Trading platforms may have specific requirements to qualify for their use. For example, day trading platforms may require that traders have at least US$25,000 in their accounts and be approved for margin trading, while options platforms may require approval to trade various types of options before being able to use the trading platform.

Most Popular Trading Platform

There are hundreds—if not thousands—of different trading platforms.

Interactive Brokers is the most popular trading platform for professionals as well as retail traders with low fees and access to markets around the world. I use the mobile phone version.

But for analysis purposes I use Metatrader 4.

Why Paper or Demo or Virtual Trading?

There are 3 main things that demo trading is for:

Understand the platform

Especially for new traders, it is important that you get to know your trading platform very intimately. You should try every button and test every feature of your platform. Thinking about how to use your platform while you are making live trades is a clear sign that you transitioned too fast.

Order dynamics

Depending on the market you trade, you have to make sure that you understand the different order types and also how to execute your trades. Demo is the ideal place for that because your actions don’t have any consequences.

Try to understand what the difference between a market and a pending order is. How does a stop vs. a limit order work? How can you place stop loss and take profit orders for your trades and what happens when the price reaches those orders?

Just try out all different order types and observe what happens. You’ll very quickly understand what the different orders do and it’s surprising how many people don’t do this simple step.

Get a feel for market dynamics

Especially if you are a new trader, this part is key to avoid large losses and unnecessary trading mistakes. During your 3 months on demo trading, pay close attention to market dynamics, how price moves and note down everything that catches your attention.

Here is a checklist for things to look for when getting to know price and market dynamics:

• When does price move the fastest and when doesn’t it move?

• How do price movements differ across different markets, and timeframes?

• Which time frame works best for your daily schedule?

• How do news impact price movements? Which news are the biggest movers?

• What type of price behaviour do you feel most comfortable with?

• Do you see lots of gaps during trading hours breaks and how can you deal with them?

• Are you OK with overnight positions?

Does getting good profits on demo trading mean anything?

Demo traders should be clear in their minds that getting good results mean nothing for any trading method or trading strategy. It is like riding a bike with training wheels on; you won’t crash and hurt yourself too much but once you take the training wheels off you are not going to be a good cyclist.

Virtual or demo trading should only be used to get to know your platform, the way you execute orders and how pricing dynamics work; it can’t be used to confirm your method

You might build a little confidence and also understand how to execute your trades within the scope of your trading method, but good demo results never translate to good live trading results.

Preparing a trader for live trading

Demo and live trading are two very different things and from a pure trading perspective they have nothing to do with each other. Once you have some live trading experience under your belt, you’ll know that the greatest challenges a trader faces are NOT related to following price and identifying a trade, but they are purely emotional nature and only exists because of the money involved.

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

• The discipline of waiting for days for the right moment to enter a trade

• Dealing with the pressure once you are in a trade and the uncertainty

• The emotions that make you stay in a loss longer and let you cut profits too early

• FOMO (Fear of Missing Out) and entering too early because you want to make more money

• Not wanting to lose money and passing on valid trading opportunities

• Being too greedy on the exit and not closing your profitable trade

It is not possible to equate virtual trading with that of real money.

The greatest danger of demo trading

The biggest problem traders who stay on demo too long have is that their undisciplined trading behavior becomes a part of their general approach to trading. A trader who isn’t punished for his bad behavior and who doesn’t feel the pain is more likely to adopt a sloppy and unprofessional attitude and once he/she transitions to live trading, he/she will inevitably lose his money.