Demo v Live Account

Hi

How does the demo differ from a live account? I am thinking in terms of overnight costs, compulsory free margin etc.

How long should a demo be successful before one uses that strategy live?

Thanks in Advance

L

Theoretically, everything should be exactly the same in a demo account compared to a live one. The only difference is that you are using real money.

Some people here say demo for at least 1-2 months, many say even longer than that in the range of 6 months :eek:

Ooohhh, this conversation again! How fun!

In demo you will become a millionaire over night. Live, the broker will take all of your money and demand more to keep from taking your butt to court.:smiley:

No, Just Kidding:)

There really isn’t that much difference. Just a tad slower. Not enough to care unless you’re a news spike trader.

The big key for the same performance live vs. demo is to take your demo days seriously.

Daytrading is not good for my ulcer. :slight_smile: I am looking at a timeframe of at least a week after which I will “balance the books” to get a nett result. This means that trades will stay in the system overnight. How long can a trade stay in the system before it gets closed by the broker? Does it depend on the free margin or some other variable?

Cheers

L

In theory your trade can stay open forever. Yes, you will need to maintain the margin to keep it open. In reality all trades are closed each day and re-opened by your broker the next day. But that is a whole other topic.

If you hold a trade over the weekend your minimum margin requirement may go up. You will need to check with your broker on that one.

Oh I forgot to mention the negative carry on holding positions to consider. If you don’t know what this means, you need to go to Babypips school.

No, not so. Liquidity issues in particular are different as is your own psychology

I would add to MYTOPIPS statement Do we ever take a demo account as seriously as a real one? If more traders did we might behaveig a very different conversation right now.

So if I am long for 1 lot and short for the same lot and currencypair, does that mean I am even?

Your broker will not let u go long & short on the same currency pair at the same time. Unless of course you open 2 different accounts, or some brokers let u have a sub-account.

It is possible with some brokers, e.g. Avafx to trade the same currency pair long and short at the same time.

I still fail to see the logic behind in doing so:cool:

Andreas

QUOTE=kelvin;45996]Your broker will not let u go long & short on the same currency pair at the same time. Unless of course you open 2 different accounts, or some brokers let u have a sub-account.[/QUOTE]

No, there is also a “spread” in the overnight interest rate.
Usually the negative interest rate is greater than the
positive rate.

Don’t forget swap rates. Besides not lettingoyu go long nad short onthe same pair If you did have two accounts and wen tlong in one an short on the other you would have a potential swap rate issue that could go against you or for you depending.

not true Kelvin. some brokers let you go long and short the same pair. Two open positions. check to see if your broker allows “hedging.” mine does.

[/QUOTE]
Its called “hedging”, I know a few peeps who do so successfully, there are a few threads on this site with hedging strategies.

Yes you can hedge with [B]some[/B] brokers not all will so make sure you are wiht one that will if that is a concern to you. But again, you are dealing with swap rates that can eat into profits if the trades are not palced right. The swap rates are small in comparison to the trade value but if oyu ride them long term they can cut into profits.

A bread producer that uses wheat and needs the cost of the wheat to stay low may hedge with a long position forward contract on wheat in the futures market.

The so called “forex hedge” is nothing more than a joke.

Any successful system that uses this can be made better by not doing this in the first place.

I agree. All you are doing by hedging is tying up money that you could be doing something else with. All hedging does is make smaller losses AND gains… if that’s all you want, just trade less! It’s counter-productive, and you end up paying the spread twice to accomplish what you could do with one trade.

By no means am I saying that forex hedging is a viable techinque. Infact I agree with you it is a waist of time and ahrd earned money. Brokers that let you are getting you to throw your money away faster.

The logic behind it is sound, because if any one gets hit you make a profit and you are still in the market albeit on the other side of the trend - which will change. In this way I narrow the band in which I play, knowing that if it moves out of that range, I make money. :smiley: I don’t use stop losses, because they get hit most of the time. I rather bet the same lot size in the other direction.:slight_smile:

I’m testing this this system on demo now and I am up $316000 in 2 weeks with a floating loss of $191000. I started with $500 000. The floating loss does not concern me to much as I regard it as working capital. A loss is only realized once it is cashed in. At this stage it is only a book entry and not an actual cash outflow. I am busy sorting out a few MM issues though.

Cheers
L