Live forex trading is a challenge. You have to come up to it or the market will simply destroy you in your first 100 trades. If you can survive your first 100 live trading challenge, you can survive the market in the long run. First practice on your demo account. As a rule of thumb, first triple your demo account twice in a row only then think of trading live.
Tripling your demo account is not that easy. For that you will have to first select a trading strategy and a trading system plus a currency pair that you will have to master. Suppose, you have practiced on the demo account and you have finally selected a trading system and a currency pair that was able to triple your demo account twice. Now, you are ready for your first 100 live trading challenge. But don't take it easy. Even though, you have tripled your demo account, don't make the mistake of thinking that you have mastered your trading system.
Live trading is quite a different ball game than demo trading. Let me explain! In demo trading, no emotions are involved. You are trading with fake money. You know even if you lose, it doesn't matter. But it is an altogether different matter on your live trading account. If you lose, you lose! It is as simple as that.
On your demo account, a trade might get executed as their is no slippage but on your live account, a trade that was possible on the demo account may never get executed. So, both the demo account and the live account behave in different manners, you need to know this. This is very important.
Suppose now, you have a trading system, you have selected a currency pair and you have demo traded tripling your demo account twice. Now, you are ready to switch over to your live trading account. Take your first 100 trades seriously and consider them to be part of your learning process. You will be trading live. You can lose, think it like this.
How much you need to start with? Many new traders think that having a large amount in the account, will help them in making winning trades. Nothing can be further from the truth. Trading large amounts of money without having the skills will only make you lose your hard earned money. So, don't do that. What you need is to start with $5,000.
Amount less than this will only hamper you in implementing your trading strategies. With having at least $5,000 in your account, you can implement all those trading strategies that can be used on any account size. Now, read this carefully. 1 pips is equal to $10 on a standard lot with a 1 is to 100 leverage. So, if you lose 20 pips, you are going to lose $200 which comes out to be 4%.
In your early stages of trading experience, a sequence of just a few losses like this can simply wipe your trading account. So, make your first 25 trades with a leverage of 1 is to 10. What this means is that 1 pip loss will be equal to $1 only. So, losing 20 pips is like losing $20 only. Similarly, place the next 25 trades with a leverage of 1 is to 20. This would translate into 1 pips being equal to $2. This will make you learn how to handle leverage.
Take these first 50 to like a marathon runner, getting into shape. Your target should be 10 pips per trade for the first 25. Once, you have achieved that consistently, increase it to 20 pips per trade for the next 25. Set your risk to be not more than 4% per trade in any case. Don't use less than 5 minutes charts. Log each trade into a trading journal. After your first 50 live trades, make an assessment of your performance.
If you feel like you can repeat, the above procedure for the next 50. If you feel confident, increase the leverage to 1:20. Only trade on a standard lot if you have a high probability setup. Good Luck!