Hi,
I am total newcomer to Forex, albeit I have watched currency trends and charts for a long long while, and finally I have decided to join a trade.
Out of some options available I have decided to try in demo mode trading platform of [B]forex.com[/B]
I have keenly studied available information about some basic trading styles and I have decided to do some penny/pips pinching known as “scalping”, with some sound methodology based on candles and Bollinger’s bands, very happy to risk few pips before SL and quitting at profit of about 1.5 times as much pips as was at risk, or upon observation that my gain of few pips begin to go down.
Now I have following dilemma:
[B]It all seems too easy to be true.[/B]
So today (first day of my trial) out of a dozen of trades EUR?USD I have lost only once and I collected decent 70-something pips in the process.
Mind you, I was very serious about selection of triggering points…
I am aware that I could be just lucky but nevertheless I feel puzzled.
How realistic these demo platforms are comparing to real life situations?
Do I bid like in real life situation or only against some easy to beat computer program designed to “suck me in”?
Demo is set up just like real life with live prices. The only thing thats different is emotions, because you are not trading real money in demo, so you have a bigger chance of not taking things seriously, because there is nothing to lose. Also in real life depending on which broker type you have, you might get requotes and slippage, unlike demo.
Demo Accounts do not take into account slippage, this is the difference between the price a trade is closed at and the price you placed the stop loss at. Slippage is a negative effect and on demo accounts all transactions are instantly executed as they are not actually being placed in ‘real life’.
Also demo accounts do not take market time into consideration. What I mean by this is that when you place a trade on a demo account it will be opened instantly with no negative difference from the price you clicked on. On a real cash account you get what is known as a ‘Re-Quote’, even on MT4. This is the difference between the price you want to open the trade at and the price that is now on offer to you.
Both of these points are not an attempt to make you worse off, nor are they ways that brokers are trying to take advantage of you. They are a natural aspect of trading as price is always changing with market conditions etc.
And as someone else pointed out, emotions are also a big player, that is unless you have a sound understanding and a firm trading plan. This way expected losses can be ‘expected’ and you wont go off the rails chasing these. Stay on a demo account until you understand what you are doing, and until you are making a constant profit, at least over the longer term time frame. To many people don’t demo for long enough and then ask why there real account does not mirror the performance of their demo account. To the contrary, I would suggest opening a small cash account along side the demo account to get a feel for your own emotions, however not many people have the luxury of income to do this.
I used a demo account for over two years while working on a certain trading theory, time well spent, and thousands of hours of screen time clocked up. Experience does show, and you will benefit from grafting hard in a demo account.
@jwlee7ucla,
My plan is to credit an account with money which I can lose. Forex.com offers miniaccounts with initial capital of GBP 250.
I am happy with throwing in GBP 400.
I decided to be a penny pincher so risks per trade are rather small with stop loss of few pips.
That regardless of leverage.
@Flyer90
Of course true but it still made me puzzled.
I am planning to carry on with demo for about a month (they don’t allow more) and then go live.
BTW, I only found out other demo related threads after starting my own.
@Jezzode,
Thanks for remarks about slippage.
These are valuable.
I have red that different brokers have different slippage rates.
Do you have any info who is reliable in that area and who is not?
As per Re-quote, I believe that it is not more than a pip on major currencies with most brokers.
I think, running a demo to master strategy for 2 years is an overkill.
Nothing like “United Theory of Finance”.
Your strategy may be perfect but once too many traders are using it, profits will stop coming and then some tweaking is due… Alternatively changing trends in economy or haphazard decisions of central banks may also defeat you.
You are betting against humans and also against institutional software, but this is constantly updated/revised by humans, who (as we all know…) are greedy and erratic.
So it is important to accommodate feedbacks from the market within your strategy.
I have found zero difference between demo and live. I’ve read that some see a difference, but that seems to be mostly psychological. As far as the tech aspects, I haven’t noticed a difference there either when placing trades. Orders go through the same. Maybe it’s just the brokers I’ve demo’d.
Actually you do get these on demo accounts as they play off a central server in the same way. I have been requoted on a demo account plenty of times, and I recall on one demo account I used, slippage was about 10 seconds between price entry and it being filled, so demo is a very good simulation.
Im a newbie too and only demo’d for a month and didn’t really know what i was doing, however I made over £1500 in that time!! (got very lucky on one deal!).Would agree with the other comment about your feelings as it’s not your money. I’ve since opened a small account(£500) and trade 50p-£1 per pip to learn. It’s amazing the difference you feel when it’s your own money, even small amounts. I personally feel i’ve learn’t so much more in a short time(3 months). Hope this may have helped in some way. Happy pippin’
I tell you my experience. I started demo and took it very seriously, was making goog pips, 3% weekly, steady and good. Than after month i got bored, started taking unrealistic trades (be they profitabl or not I doubt I’d take them using real money) so decided to open a real account.
First week I lost 10% of my accound, there was revenge trading there was panic there was pure hoping for the best. Second week I got myself together and started profiting around what I was on the demo 3% a week. I used MT4 oanda for demo and am using oanda java platform to trade and I noticed the price movement is a bit different. In the first week I put same identical orders on my mt4 and oanda java (one is real money one is fake) both with trailing stops. MT4 got a good 200pips win while the oanda java got me a 10pip loss. I was…very angry. Also my stop loss on oanda java was 1.053. The real price on oanda chart only got to 1.0529 then dropped 40 pips which I would have won BUT for some (SL hunting) reason my stop loss order was triggered. And yes I checked neither bid or ask price reached the 1.053.
So when you trade real money, there is emotions…and don’t underestimate that, I was treating demo like real money hell I even worried about how well I did but when I started trading real money it still got to me. And there is slightly different price action to the demo account…at least in my experience.
I’m using Oanda for practice, but you can use their web platform, instant dealing, or use the MT4 platform and it takes a second to complete a trade, I don’t know if this is due to the MT4 platform having to query the sever or not.
@Flyer90
Of course true but it still made me puzzled.
I am planning to carry on with demo for about a month (they don’t allow more) and then go live.
BTW, I only found out other demo related threads after starting my own.
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Martin,
Just to let you know I am on Forex.com Demo. as well
One of their agents emails me regulary to make sure everythings ok and she told me that after a month on the demo I can’t get onto the site, but if I email her then she can keep giving me two extra weeks.
Might be useful if you like the site.
I’m not sure if I will stay on as I find the charts tend to stick at times and when you change times there are suddenly 2 or 3 new candles appearing at once. Not very good when scalping.
I am also with Plus500 which I find is good, although I wish their candles were tweaked a bit better. But you can’t have everything. But there is no limit to being on their demo.