Transfering from a demo account to a real one

Beginner Questions
1

Nice forum btw - thanks for the advice so far.

So I’m a total newbie and I’m about to ask another ‘Is it that simple’ question. However please don’t switch off as mine has a slight twist. The twist is my background and experiences.

I’ve always been a keen gambler and enjoy studying the psychology behind why people bet the way they do. From what I can see - currency trading is no different. A lot of the advice for newbie’s is based around learning the fundamentals, bankroll management, re-evaluating winning and losing trades after the event, assessing risk v’s reward and transfering the skills from profitable play-money trades into real money investments.

With regards evaluating profit or loss - One thing I don’t see talked about as much on this forum as I would on - say a poker forum, is the sample size. For example, lots of traders on this forum seem to make comments like “I made $500 yesterday” or “I made 140 pips last week”, when the first thing I would say is; That sample range is too small - Come back after you’ve made 10,000 trades and lets assess your results then.

But anyway, from what I can see - the one massive advantage with currency trading is the volumes do not effect the outcome so much. For example - if i had a stratagy which allowed me to win money on a $25 poker table, the same stratagy wouldn’t work at a $1000 table as (on average) the standard of player improves as the buy-in increases. The same rules apply to a football game. If I found a winning stratagy betting £1 on Man Utd - that would be fine, but this system wouldn’t work if I wanted to increase each bet to £1000 as most bookie’s have an upper betting limit which is no where near this.

I know I the same theory applies to currency trading but assume the market would not diverse as much with the volumes an individual trades (working on Mr. Sat-at-home-Average-trader).

So anyway, back to my question; So far I’ve been trading with play money on Oanda and have been showing a steady profit. To call me a day trader would be an exaggeration. I work shifts so regularly trade for only 1-3 hours at a time and within this time open and close all my trades. I currently use 1:50 leverage. I plan to deposit £200 real money into an account soon and if this proves successful will probably deposit £1k-£2k thereafter,

So my question is; [B]Presumably a play-money accounts do not replicate exactly real money trading?[/B] For example - I’m guessing play-money trading never accounts for slippage (which I’m guessing will inevitably cost me a few pips here and there when trading for real). So realistically - [B]what else should I take into account real money trading which you don’t factor when trading with play-money?[/B]

Jimmer

2

Hi Jimmer, welcome to the forum. I had a few comments for you:

I think you are very right with your line of thinking about the sample size. In the multi-trillion-dollar-per-day forex, there is no lack of liquidity. So as a retail trader I’m pretty sure that you can scale up your trades with nearly zero execution impact. That’s what I’m doing also… practicing with pennies and planning to scale the identical strategy with dollars.

Oanda: good broker choice IMO. One great thing about them is that you can gear your trades to units instead of pips, which gives you ultimately flexibility and precision IMO.

The “play money” account does (or is SUPPOSED TO) represent the live accounts identically, as far as execution goes. The biggest difference is you the trader: specifically the psychology of trading with Monopoly money vs. real money.

You’re on the right track!

3

Hey Jimmer,

Fellow newbie with a poker background. You point about sample size and the limited effect of scaling up position sizes or “bets” is well made.

As an induvidual trader starting out we’re recommended to find a system and stick to it for a “reasonable” amonut of time, then modify it if you see potential or abandon it for a new system if it is a disaster or simply does suit your trading style/time available etc.

With so many currency pairs, trading methods, time frames, increasing experience and other variables I’m not sure how much benefit a large sample range of trades would be unless you stuck to the same formula, pair, time of day etc. if you see what I mean. You would just see if you were getting better at it:)

One other thing, I’ve heard good things about Oanda but if you are trading from the UK one of the spread betting companies that offers forex would allow you to take your profits tax free. PaddyPowertrader offer good spreads but I personally don’t like the platform and it’s a minimum of £1 per pip. Smart Live Markets offer MT4 for spread betting and I think offer 10p a pip or maybe less. I’m demoing them atm and so far so good, I’ll probably go live with them next week especially if their offer of your first £300 losses in you first month, back, with restrictions no doubt. I don’t work for them by the way:)

4

Slippage is not really an issue unless you are trading maybe 10 lots or more ($100/pip)

5

I have to appologise to you all! I’ve just read my post and realised
1 - I’m boring!
2 - I talk loads about everything else other than Forex trading!

Oh well. Thanks for the replies. I plan to deposit money this week - I’ll keep you posted.