A few thoughts

I am writing this with no clear idea of why, I feel like I am having too much success in demo trading, and waiting for reality to come and slap me across the face, but it does not seem to be happening.

How lucky can a person be :confused:

Well I guess the only answer is to invest some real money.

I seem to here a lot of stories of excessive earnings in demo trading and then blowing real accounts.

The only change would be trading mindset…

Any thoughts?..

Before someone asks me I am using Stoch, Fibos, Psar with a risk ratio of 1:1 - 2:1

Hi Drew
good that you are having success. When your hard earned is on the line then emotion soon can get in the way.
wishing you the best of and continueing luck. keep us informed
Dave

How long have you been demo trading?

About a month and a half, but I have been literally living and breathing forex everyday since I found babypips, I have no doubt that I am still new and have a lot to learn.

I dont want anyone to think that I am professing to be an experienced trader, or even a knowledgable one.

I have over a 90% win rate and an average of between 10- 30 pips a day.

I don’t like demo acount trading because it removes the emotional aspect of trading which is as important as everything else. Demo trading is for just learning how the platform works, but if you want to test your system you should do it with very small positions.

Let’s say you have $10,000 you can put towards forex trading. What you should do is make a plan to start with say 5% or $500, and slowly add money as you are able to prove to yourself your system works.

Hey Drew,

It’s great to hear you’re having early success with Forex trading on the demo - keep up the good work! I wont try and put you off moving to live trading or anything like that but I think the hidden question in your post is what are the likely caveats, the subtle differences between demo and live that can affect one’s performance.

You’ve clearly spotted a major one in the psychology aspect of it. Don’t under-estimate this as it will cause you to make mistakes, close winners to bank a profit and let losers run - even professionals still make those mistakes on occasions when the stakes are high.

However there are other more subtle differences, such as the way your broker executes your orders. In a live account you are more likely to see slippage on your orders and tiny delays placing them. If you’re doing a scalping method this will certainly be more significant than longer term trades but none-the-less it’s an extra pip or two here and there that costs.

Another one to watch out for is back-testing your strategy. There’s two risks here. Firstly if you haven’t back-tested it at all I would as although your system has performed well over the last month there is no guarantee that it will continue - it could just be down to the current market conditions. You should back-test over as much data as you can to see how well your method performs in different market conditions, at different times of the year. I speak from experience when I say I’ve had a system that back-tested for 3 months really well but when I went live it promptly bombed for the next three!

The other risk with back-testing is it’s not infallible. Because it doesn’t show the movements that occur within a candle some trades that appear to work may not have and vice-versa. However if your system back-tests really well over long periods then despite the inherent infallibility of back-testing you should have some confidence in the system.

With all that borne in mind, when you go live only put in part of your capital. Trade for three or four months and verify that your method is continuing to work as expected and then start to add in the rest of your capital.

Best of luck - and good trading!

They say that the beginning and the end of any trading system can be found by calculating the adjusted R expectancy = (1 + Reward/Risk)(Win Rate) - 1. It matters not whether the calculated sum is 4 or -0.001. What matters is whether the answer is positive or negative. Positive means you’re gaining money per principal invested and negative means you’re inevitably losing money per principal invested.

Before going live, I would suggest making a trading log (in Excel), if you have not gotten in that habit already. You should record every trade you make, your rationale for entering the trade and your eventual rationale for exiting the trade. You’ll find that, over time, you’ll make the same or similar habitual responses to stimuli coming from the market.

One note to consider on why traders blow their live account after being successful in a demo account is that they thought they had mastered the trade. They thought that the strategy they had used in a demo account will work on a live account. partly yes but oftentimes not. Market changes and so your strategy. Plus you have to consider the delay on transactions on the live account. So, if you are thinking of going live, don’t be too aggressive as if you already mastered the trade. Patience is a virtue. Little by little you will gain ground on a live account.