Even if the critique of simulated trading is correct, the benefits far outweigh the costs.
Let’s proceed with how to use the simulated or virtual account.
The Right Way
1. Set the account size to the level anticipated for opening an account.
2. Apply the sequence of trading challenges that are outlined in the previous chapter and test them in the virtual account.
3. Test yourself in the following challenges:
a. Sequential wins. Try to get 9 sequential wins in a row of 10 pips or more.
b. Stop loss test. Place an extra lot on each trade and place a stop loss of 50 pips on the second lot. Compare whether you improve the percentage of being stopped out.
c. Profit-limit test. Place an extra lot on each trade, and place a profit limit on one with your average pip goal, and on the other leave it open.
4. Select a currency pair you have never traded and put on 20 trades on that pair in simulation before you try it in real time.
5. When trading a real account, place the identical trade in a simulated account and vary the stops, limits, or lot sizes to compare performance.
One of the greater challenges that the simulated account offers an opportunity to test is that of discipline. If one can’t follow a trading strategy and rules in a simulated account, it may be a prelude to the lack of discipline in a real account.
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