I’ve been reading a few posts here and, on a few occasions, people have mentioned that demo trading only gets you ‘so far’.
My question is, why is that? Do demo accounts not accurately model the costs/fees/lag times that real accounts have to pay. Or is it strictly a reference to the psychological differences between risking nothing and risking real money?
Because of the psychological differences which are incurred due to risking ones
own money people tend to start to invent reasons why they are now losing which
can manifest itself as slippage, stop hunting, lag, etc.
It is all about the psychology of trading. You wouldn’t become a professional hunter playing Deer Hunter or a professional golfer playing Links 2013. Doing something virtually helps you in certain ways, but you can’t hope to become a professional trader playing with virtual money on a virtual trading account. I am for demo accounts only in the case of a seasoned trader wanting to test a new method or technique.
A demo account is very useful to new traders who have not yet developed a good working strategy. Also, expert traders can always use it to try out a strategy or do some sort of back test. Overall, a demo platform is very useful.
Demo accounts are great for practice! There is only a slight problem - speed of orders execution differs (demo trades are normally executed within 1 second while real trades within 5-10 on average) and sometimes 10 seconds can be crucial…
100% agree with above you also want to learn your platform inside out. In most cases if you want to lean how to throw your money away, start with a live account. My suggestion would be to open the demo, with what you intend on depositing and start testing different strategies, leverages and money management.
If you want to make an accurate comparison to golf, it would be like you going to the course and practicing and preparing for an upcoming tournament not playing Links 2013. Same with professional hunter or as a matter of fact professional anything.
Make a Plan; Test a Plan; Work the Plan
[QUOTE=“trader545;569874”]Demo accounts are great for practice! There is only a slight problem - speed of orders execution differs (demo trades are normally executed within 1 second while real trades within 5-10 on average) and sometimes 10 seconds can be crucial…[/QUOTE]
What broker are you using that it takes 5-10 seconds to execute your trade?
I have to disagree…live micro accounts are excellent way to learn to trade with your own money… As you’re working with 1/100 of a point you can open that account with 50 or 100$ and trade away, and also learn how that platform performs in real time… After that when you’ve made some profit or loss, you can move to mini account, and finally to standard account when you think you are ready.
And as someone already said, problem is really psychological nature of trading with your own money… There are risks that you wouldn’t dare taking on real account, but on demo you would.
If you are trading for real money with a market maker then it is common to have re-quotes or widening of spreads during news times. With real STP/ECN accounts you wont get re-quotes but you may experience slippage, especially during times of high market volatility. I have not experienced these things on a demo account. On top of that psychology is probably a much larger factor. I for one have had to train myself to leave my positions open for some time so I can make more than a small profit even when I’m on a demo account. When its for real money I know I will be closing trades with too low a profit because of a manifestation of fear that will come from losing (I’m not a great risk taking at the best of times).
My turn. I’m not sure what you mean. You’re saying that your trading platform is different in a demo account than a live account? Tell me what’s different? I have demo and live accounts with a couple of different brokers and there is no difference between the live ones and the demos. One of the purposes of the demo is so a trader can see what that company’s live accounts are like.
As far as psychological I’m assuming you mean you’ll know what it’s like to lose real money? If that is what you meant, I think you would agree that no matter how many live or demo accounts you open and no matter how much you practice learning to lose is an on going issue that a trader has to deal with and keep dealing with. Wouldn’t it make sense to practice and practice in a demo test your plan, money management your platform before going live to meet at some point the inevitable a loss?
What about opening the $100 account and you blow it up because of the simple mistakes that all new traders make when first starting out? What do you do next; open another $100 and if you lose that; open another? You can always go live after you test your plan first with a demo and maybe you could avoid some of those simple mistakes. There’s a reason why most successful traders tell you to open a demo first.
[QUOTE=“gp00053;570056”] There’s a reason why most successful traders tell you to open a demo first.[/QUOTE]
I’m not sure how you could possibly back this up with facts, as most traders don’t publish their personal trading statements so you couldn’t know of these traders are successful or not. Also I’m not sure how you have scanned the World Wide Web of traders and gathered all of their opinions on demo accounts. Your statement is not factual at all. As a matter of fact demo trading as we know it today is a fairly new concept, as is Forex trading as we know it today. For much of the history of trading, people started with cold hard cash and history has shown a large number of successful traders who didn’t have the luxury of learning on demo accounts.
But back to the primary case against demo trading. Your human nature won’t come into full affect until you have your own money on the line. I believe many traders don’t have trading method problems, they have trade management problems. Statistics show that traders are right more than 50% of the time, except their losers are larger than their winners. It’s human nature to cash in on winners early out of greed and let losers run out of hope. You do not experience the full affect of these emotions in demo trading. I would say the most problematic issues of losing traders(the cycle of greed and hope) are helped the least by demo trading. You can master your method, learn your platform and have a solid money management plan and execute it perfectly on your demo, and as soon as you open your live account, human nature steps in and becomes your ruin. These emotions are not triggered with fake money on a demo account. I think most here are saying demos are good for learning platforms and methods, but there is no alternative for training and mastering your emotions other than trading in the world of reality.
Just as factual as yours. The rest of you blah blah blah that anybody who’s been trading for more than month has knows this subject has already been discussed to demo or not demo a 1000 times . You say present facts when you know it can’t be done. Which is why I never asked that trader who I responded to. All I did was make a statement and asked him some questions about his post. Didn’t say anything about his statements being factual or otherwise. What I said is my opinion the shames as yours. So take your Meds and go laydown
The usual response when people are caught pandering opinions as facts. How could I rebuttal such a profound and intelligent post. I secede.
:57:
Ok, what happened to me once while i was trading on a live micro account was that during the news, the price on my MT4 platform froze right in the middle of publishing news figures…and after 2-3 minutes it unfroze and it left me without the opportunity to do anything in that time period… To close orders, open new orders, adjust them etc. On the live chart all you can see is a big gap in that period… When i logged in to my demo account i could see no gap and no freezing problems. Obviously if i was to trade with demo account i wouldn’t experience that.
Yes demo account has it’s uses and is good for some things, bad for another. You will probably notice that when someone opens demo account they do it with 10 000$, or 20 000$, 50 000$ or even 100 000$. That is ridiculous. People are opening demo accounts with money they can’t even start with in their dreams. You can practice your strategies yes, money management skills sure, but what you will not get is that adrenalin rush when you do your TA or FA homework and then open your position. When you sit there and stare at your account diminishing when the price goes against you wondering what went wrong. Should you let the price hit your stop loss, should you close it now and suffer small loss, maybe the price will reverse? What if you delete your stop loss and let the price run its course.
On demo account you set your take profit target, your stop loss and go to a movie theatre, and then come back later to see how are you doing. Believe me you won’t be doing that live, when the price oscillates between -100$ and 100$… You will want to be there, to see what is going on…to maybe close position with 20 pips profit…etc. You will get nervous, you will sweat, you will be angry at yourself why did you do that and not this. You will be like a gambler who after suffers loss wants another go to recuperate… All those emotions you have to fight when you are trading with your own hard earned money.
Virtual money doesn’t have that kind of impact on your psyche like real…believe me i tried it 
Yes when you lose your 100$, you will recharge it with another 100$ ,and another after that…And each time you will be wiser, and smarter… But, only after you tested your strategy on demo account… It doesn’t have to be 5 years demoing or 5 months, you need 2-3 months to familiarise yourself with market, platform, and your strategy. But you can’t fool yourself that everything will be that smooth on live account like on demo.
Look at it like this…If you train boxing, judo, bjj you are first sparing with your partner and learning technique, but after that you will have to go to a live competition, pay that entry fee and get slammed to the ground hard for your mistake… Because your sparing(demo) partner will forgive you on it, your live opponent wont. You will lose your entry fee competition after competition until you finally make it…
You will never be the true master of boxing, judo or bjj with only sparing… They will eat you alive in competition…and trust me i tried that also and still am
I personally was never fond of demoing, it’s just a game. Of course it has it’s plus points but it’s just me I can’t take it serious.
Cheers
I think most reasonable people would agree that because somthing happened once that’s enough support a case for difference in the account. As I said I have had and used both and I’ve seen a difference. But what we seem to be discussing is semantics.
[/QUOTE]You will probably notice that when someone opens demo account they do it with 10 000$, or 20 000$, 50 000$ or even 100 000$. That is ridiculous. [/QUOTE]
I agree with you 1000% In my opinion huge mistake and I think if you go to my op, you’ll see that’s what I said. I think a demo account is like any other tool traders use. If it’s not used properly then it’s not worth anything.
Again I agree with you 1000% and again if you go back to my original post that’s all I was saying.
Here’s is where we don’t agree. But again this is only your opinion, just like I say you will face everything you said, no matter whether you demo or not and again I think most reasonable people would agree with me. You could practice in your demo account for 100 years and no matter when you go live at whatever point, you will experience; [I]I]"[/I][that adrenalin rush when you do your TA or FA homework and then open your position. When you sit there and stare at your account diminishing when the price goes against you wondering what went wrong. Should you let the price hit your stop loss, should you close it now and suffer small loss, maybe the price will reverse? What if you delete your stop loss and let the price run its course."[/I] All I’m saying again which is my opinion, if you open the demo with the same amount of money and leverage you intend to use when you go live and practice until you haveyour method and money management down, in my opinion you will have a better chance of not blowing up your account.
I did make a mistake, but not on purpose when I said “most successful traders would agree with me,” I forgot about some people on baby pips, definition of successful is limited to traders who provide their bank accounts only. By most other peoples definition of success knowledge and experience would also account. Anyway what I meant to say if you read forex related books, video courses, and asked the majority of coaches and mentors, you would find they would agree that new traders are better off when they start with a demo rather than go live micro account. Now just so I don’t get any more traders suggesting or stating I’m lying or making statements that are not based in facts, this is based on my personal opinion and experience.
Thank you for answering this question. It’s the first time I’ve asked it when someone says start with $100. I don’t have a problem with what you believe, I just think that newbies need to consider that more than likely they will blow the account up not only because “no matter your plan or how much you prepare you will still have loses”, but also because they will probably make the same silly mistakes all traders make when they first start out. Again that’s my opinion. To me common sense tells me that if I get out as many bugs as I can in my trading plan before I start trading live. Again my opinion. You also said each time you blow that account you will become wiser and smarter but only after you test your strategy in a demo account. Again to me if that’s my plan, and since no matter when I go live I’m still going to have loses, then to me it makes more sense to demo first.[/QUOTE]
Again all I was trying to do, is to discuss this in a respectful way so that we can all come away better traders. Newbies and some experienced traders have to learn that there is no one size fits all and no only way to do anything when it comes to forex. Again just my opinion.
Thanks for the repsonse best wishes and continued success
Gp
I’m a newbie as well so this is from personal experience and from people around me.
Yes, it only gets you “so far”, in terms on how familiar you can get with the system, and how much you can refine your methods. Exactly how far it gets you depends on your own psychological tendencies. If you’re a very serious and/or risk-averse person and prone to sleepless nights when you lose (even something of no value), then demo accounts will be good enough to train you emotionally. But if you’re a gambler a heart, or find it difficult to work up a sweat, or finding yourself taking unplanned ri when using a demo account, it’s a sign that you probably need to put some real money into it.
It’s really just a YMMV situation as opposed to a one-size-fits-all solution of “demo vs no demo”.
This is both right and wrong. Everyone is wired differently and perform differently under the same circumstances everyone is exposed too. If you can convince yourself the demo account is as powerful mentally as a live account is you will be ahead of the game. However most people think they can when in reality the mindset isn’t fully developed and once they go live the mistakes begin building.
I started with a demo account, I was new to the whole forex market and had no idea what everything was in the platform. It gave me a chance to understand how things work, where the tools were and to set up templates. Then it allowed me to see if the strategy was going to play out well or not. Once I went live, you can only guess what happened. I started to tinker, adjust and change everything I worked on with the demo account and began loosing and loosing.
So demo account good, yes to get familiar with platform etc…
Demo account bad, yes it gives a false sense of you know what you are doing.
What is your broker?
Why you still using this broker?
Anyone has similar experience [B](a trade executed within 5 – 10 seconds)?[/B]
And if so, what is your broker?
A demo account does everything except mimic the psychology of trading. It’s like the perfect game simulator, everything looks just like the real thing, except when you die you know it’s just a matter of trying again, unlike dying in real life where you get no second try.
The psychological part is of huge importance and since a demo can never give you this part, I recommend moving from demo to a small real account with micro or nano lots once you learned the basics in a demo.