I started demo trading from January 2014 by using a MT5 platform offered by Alpari. In the last 40 days I have made $5800 of virtual money. I am also watching lots of video tutorials and also got the “Steve Nison - Candle Charting Collection” DVDs. I plan to continue trading on demo account and watching tutorials and seminar videos for another 2-3 months before I go for a live trading account.
Now, what I want to know is that if I am going the right way by demo trading for another 2-3 months or should I start now with live account.
I wish to trade on Alpari as I am used to the platform so I want to know if the Live account will be similar in executing the orders.
In my opinion you’re starting off on the right foot. At this stage you should be trying to learn as much as you can and support what you’re learning with practice, practice with a demo account. You should use the same start up money and leverage that you plan to start live with. Keep practicing to build confidence using in your trading method and money management rules. This will help you to deal with patience and discipline when you start live. In my opinion I would not put a time frame on trading with a demo. The time to go live is when you’re reasonably sure you can follow your plan, money and management rules the time is different for everyone. Good Luck
Gp
Starting with a demo is a good idea, use the demo account to develop a strategy and to answer your query regarding difference between demo and live, other than the obvious one, live accounts with a few brokers vary widely from the demo version they offer…
Thanks Gp, My winning percentage is more than loosing, I mostly trade short term by understanding the trend. I always use stop loss and also modify it during the trade as per requirements. Can you tell me if there is any big difference other than the emotional part of playing with real money, between a demo and real account. I am talking about the kind of liquidity in real accounts and I am also concerned about the order execution time.
I was reading book by Alan Jankovsky 3 days ago a book I recommend. The only real difference is emotional but you must not get attached to your balance. Once I stopped bean counting I pretty much never even think about it anymore.
As long as you are not risking more than 1-2% of your account on any trade and generally allow your stop position to dictate your position size you will really enjoy using real cash. I leave the counting for years end my ratios never change they stay the same, that’s my risk/reward ratio.
It’s fine…
By the way I also read an Ebook by John Piper, surprisingly good and he pretty much says the same that anyone who claims they have more than even 11 straight losses in a row is lying as it is not statistically possible on the laws of probability. So if you placed 11 random trades you will at least win 4 or 5 those. He title’s the chapter the curious case of 33 consecutive losses (someone’s erroneous claim). Even at that you still can’t wipe your account at a 1% risk on each trade.
Personally I have not noticed any big differences. I think again my opinion, the more time you practice in the demo to build confidence and discipline, the lest emotional change when you go live. There are traders who don’t agree with me on this and they are entitled to their opinion like me, but personally I think anybody who thinks that way, will have trouble dealing with emotions no matter what.
I think FxMall is also right there are differences between some brokers live and demo accounts. But I also think in all cases, anyone who starts off, with low rent moves like doing one thing in their demo and another in their live without letting you know before you get a demo, is a recipe for problems down the road. Any broker I interview, one of the questions I ask; “is their any difference at all between trading in your demo account and trading in a live account?” I would only use a ECN/STP & DMA/STP broker. Like you I’m mostly a short term trader, so scalping and hedging is important to me. I find the answers to all these questions before I sign up. I also check the 2 sites below for their reviews with any broker I’m considering Forex brokers and http://www.forexpeacearmy.com When someone gives a bad review on those sites they contact the broker and give them a chance to respond. I’m just as interested in their response, how long it took them to respond as I am in the complaint. I like the second site because they have a great method to allow you to compare brokers. But again I have not noticed any big difference
Thanks a lot for this reply I am planning to restart my demo trading with a $500 account as this is the amount I will start with when I go live. I will also check those sites and reviews before I go for a broker.
There are few differences. Slippage is nonexistent in demos. Slippage when using a market order during a news event can be massive. Make sure you limit the amount of acceptable slippage you will permit in your platform. There is also positive slippage, I hear tell. I am sure I have been the beneficiary of this strange phenomenon but I only remember the negative slippage – go figure. Also, when you click the buy or sell button in a demo you immediately are in a trade. In real account there is often a wee bit of a lag which, even if only a few seconds, will sometimes seem like centuries.
As for “stay on demo” comments… I actually disagree. Open a small account (after using demo to thoroughly learn your platforms features) and get trading. With even a small amount of money on the line you will not be as likely to take stupid risks and will have a bit of skin on the game to put you under the pressure of losing your hard-earned money – something no demo account can simulate.
I am not saying take out a 2nd mortgage and quit your day job but even a few hundred dollars in a live account will keep you vested, attentive, and under a bit of real pressure to PRESERVE your account before you try to grow your account. Capital preservation is rule number one.
Well, let us not forget one thing. Even if you are a master of the demo, you will struggle with a live account. The difference, I think in reality, is very big. So, in my opinion, a newbie must use both at the same time.
The difference is quite huge:
Firstly, I would rather you converted the $5800 into pips. It is a more realistic measure of performance where demos are used.
The emotions attached to real money don’t exist in demos. IE you don’t care much when loosing virtual money, but it isn’t the case for real account.
I have to agree with Grix, You wouldn’t play Capitalism and say I am practicing for the real thing that having said I use a demo to back test a pre-defined strategy on a particular time frame, once I have traded and developed the system. I use it as a dry run board to refine long term trades.
You will find for the time I am doing this I am out of the real market but I ma applying the same MM principles after all I am back testing for the real thing but trading on a demo from fear of loss, then you should reconsider your entire approach.
Trading is simply a combination of risk and reward aided by good money management skills. So if you learn the basics minus the chart. Spend at least 2 months constantly observing price movements and not actually taking trades you will soon have a system combine it with money management and R/R ratio you will be okay.
Thanks everybody for the replies, I would like to say that I understand the difference in terms of emotions because when your real money is on stake then everything changes. The feedbacks I got here will play a big role in the coming weeks and I will be disturbing again if I have any queries, I feel good to be here
That is a good suggestion you have made. Demo account is good for all traders, whether you an expert in trading or not, we need this demo account to get more knowledge and develop our own skills. The only difference about this two account is that demo is meant for practicing without any risk involve, while real account is meant for earning money but there’s risk and reward.
That is a good suggestion you have made. Demo account is good for all traders, whether you are an expert in trading or not, we need this demo account to get more knowledge and develop our own trading skills. The only difference about this two account is that demo is meant for practicing without any risk involve, while real account is meant for earning money but there’s risk and reward.
Demo account is for training and trader can improve their trading knowledge and experience so trader should focus and work on demo account and after getting proper experience and knowledge they shift to real account which involves the real money.
I am planning to restart my demo trading with a $500 account as this is the amount I will start with when I go live. I will also check those sites and reviews before I go for a broker.