Demo results vs Live results

Beginner Questions
1

Hello everybody,

I know this is not the first “demo vs real” thread on babypips. I have read through most of them but i still haven’t found a good answer.

Here’s my problem…
When a person posts His/her strategy or system or posts its backtest result, i see responses such as…

“have you backtested?? real or demo??”
“these results are demo or live?”
"demo results stand for nothing, please post live ones"
etc etc…
In fact, there are people who completely disregard the strategy and/or results if they are from a demo account. Why is that so?
I mean, a mechanical system should work the same way on both accounts right?
Even if there is a difference of a 100 pips between the prices in demo and real… that should not affect a system based on technical indicators.

I ask this because i have very recently shifted from demo to real and i see absolutely no difference at all
There is a slight difference in price because of different server but thats ok.

Am i wrong? Am i missing something? please let me know…
thanks…

PS: when i say system, i only mean strategies or trading styles and not EAs. I know some EAs take advantage of tick values to produce good results on backtest but fail miserably on live ticks.

-azz

2

I absolutely agree. My demo account is as real as anything. BECAUSE I treat it that way. Over a year and a half now I’ve been demoing, and absolutely will not go live until I have proven results. It will be a running start, for me when I do. Also, I have another demo account that I trade more risky. So, I basically have a real account and a demo account. I get real bent out of shape when things don’t go my way on my real account, and am working on the psychological aspect of it on there. And I know when I do eventually go live, I want it to be business as usual. Both psychologically and financially.
I plan on going live the beginning of next year. And that date has changed many times already.
Mike

3

Welcome to forex. There are things you should pretty much always do. Have a long term plan, make sure you apply money management that will protect your capital and grow it and then work your plan with patience and discipline.

Next pretty much most things you should never do. Trade without a stop loss, revenge trade, try to trade without know the basics

After those two, comes the killer :46: Depends on. . . personality, what are you trying to achieve, indicators, no indicators, major support, what’s the best time frame. Then Finally : Demo vs Live, is there any difference.
2 camps basically. 1. Demo to practice what you’ve learned, tweak your entire trading plan. Avoid paying for silly mistakes. 2. Can’t learn patience and discipline from a demo, will pay more attention and making the same mistake over and over.

I’m in the demo camp because in my opinion the pluses out weigh the minus, two fold. In my opinion if you want to find out what losing is like, there are better examples than forex; go to a casino and play slot machines. There is absolutely no statistical proof that I’m aware of that by opening a live account rather than a demo you will learn from your mistakes.

I say it depends on you; your experience, personality, financial situation support etc. Some people may learn better if they make a small deposit and fly by the seat of their pants. I believe it’s better to learn first what kind of trader you are or can be and what you’re trying to achieve from trading. Common sense tells me that you can make a better overall plan, the more you practice and learn the better the tweak.

The thing I really don’t understand, is a lot of the traders say you’re better off trading live with a small account and learn that way, are the same traders who call other traders guru’s, a cons, don’t pay for anything because with a little research they’re not selling you anything you can’t find for free with a little research.

I say demo first, as you learn make and practice your plan, get the silly mistakes out of the way, the inexperience out of the way. And take maximum advantage of a demo, by opening it using the same trading method, money management plan as you would live and keep practicing and learning til you have enough confidence in your trading to give you a better than average chance trading your plan. Again my
opinion
Gp

4

The only difference I see on demo vs live is that on demo, I would take an iffy trade even though it’s not 100% of my liking where as on live I would probably skip out on the iffy trades.

5

If you have tested your “strategy” on demo and it works then it should work out on a live account. im a newbie on a demo right now going live very soon. so im not ultra experienced, but why wouldnt it work? depending on what type of account you are going to open there may be slippage and re-quotes which you might not get on a demo. also rollover fees you dont have to pay on a demo. so if you plan to hold trades from more than a day you would have to factor in those charges. What type of trader are you? what kind of size trades do you put on?

6

There’s not much difference between demo and live, although with live, you can see for yourself how slippage and lag can influence your orders. My personal preference is to trade live with a 0.01 lot if I’m experimenting or testing a strategy.

7

+1 on that. I do the same. Demo is 100% useless in my opinion and those who claim their demo is just like a live account because they treat it as such do not understand that the psychological impact is always unaccounted for and you can’t simulate that. Psychology makes and brakes traders and there have been so many traders who had great demo results over a long period of time taking the proper trader, risk management etc, but when they go live they go bust because they have never trader before and start when they go live.

8

One simple answer: If you see that someone test some stuff on REAL, it makes a sense to scrutinize closely on it and probably put it into practice…

9

Testing live vs demo is usually asked because people who use EA’s usually backfit the results and optimise it for the best results. When you test this way there is no guarantee that it will work going forward. But if you are manually trading then there will be very little difference.

10

So what’s the answer? Some traders say demo and give you their good reasons why you should demo first. On the other hand traders say go live and give their reasons. So what’s the answer? We all should have learned two things from this thread. 1. The answer is, the what you do, is just as important as the why you want to do it. 2. There is more than one way to approach trading in the forex. So what you need to do is in this case, is figure out what is better for you and the things applicable to your experience, personality, goals etc. , You have the information for both, the options are simple demo; don’t demo and/or combo. So pick the least of the evils, by choosing the option that fits you. Again just my 2 cents.
Gp

11

its better to start with Demo accounts, live accounts are good but if you dont have the market experience you may end up loosing your capital.

12

Hello,
Thank you all seniors for your detailed comments…
Sorry i was busy the last couple of days…
And wow! there seems to be divided opinion about demo vs live.
The most important factor i know of is the psychology… i agree… trading live, even if on micro-lots, will help train my mind.
But as i have mentioned in the first post, i am only considering the “technical aspects”.

Therefore, a “strategy” that works on demo should technically work on live too, right??
If yes, then why do people completely disregard demo results??
Are they wrong in doing that?
Thanks
-azz

13

I just had to add one more thing… when i started out, demo helped… A LOT!!
I didnt know what buying or selling was and how it worked.
How much money i earned/lost when price moved a few pips from my buy/sell price…
What was margin? what was swap?
What was hedge??
How leverage works??
I started a demo account so i could relate to what others were saying about the above topics.
Moreover, i could test out what all i learnt in babypips school.
I dont think it would be a good idea for an absolute newbie to start off with live even if its just micro accounts.

I think starting live with zero experience would result in adding fuel to the already rampant idea that you cant make money trading forex/stocks.
The person would be like - “I started off with $50 and lost it all! Thank god i did not invest $5000!!
This forex thing is useless!” etc etc

But of course, nothing trains you better mentally than a live account.
Just my opinion.

I hope all that makes sense to you guys… English is not my first language so please forgive me for any mistakes.

-azz