Hi,
Apologies if this has been posted before couldn’t find anything under the search option. I am wondering if anyone has went from a demo account say 3-6 months transitioned to a live account? I understand apart from data execution and a few extra fancy features the results whether you win or loss in a practice account are exactly the same apart from traders psychology is this true or is a demo or live account like night and day difference you may as well not do a demo account?
I found demo accounts and live accounts exactly the same technically to use. The difficulties are with your head once real money is on the line. In my opinion using a demo for 3-6 months to get used to the technical side of trading and then opening up a small micro account is the way to go. It’s probably a good idea to get some practice in real money management before too long so you don’t pick up some bad habits (like I did originally).
i think I will be going that way mate. So, all the results and strategies you used on the demo account worked on the live account? Or just the technical functions?
If you get the same price quotes, why wouldn’t they work? But you have to be able to stick to your plan. And that may be more difficult in live account.
Demo accounts and live accounts operate on the same platform, and are identical EXCEPT for the fact that orders in demo accounts are not paired with actual market liquidity.
When prices are changing very quickly, order execution in [B]both[/B] demo accounts and live accounts can experience a [B]slight[/B] slippage in price, due to the fraction of a second required to register a transaction, even on the fastest servers. This slippage may be [B]one or two tenths[/B] of a pip.
In addition to this slippage, [B]live accounts can experience additional slippage[/B] in fast moving markets due to the fact that orders must be matched with available liquidity providers. This additional slippage in order execution in live accounts can be as much as [B]several pips in extreme market conditions.[/B] Demo accounts do not experience this additional slippage.
While I would echo what has been posted here previously, I would add in the psychology element, too. While demo trading is recommended for the majority, for some people it just does not work that well. I basically never demo traded, I went straight to live trading. I had a short try at demo, but I found that the lack of consequences meant that I traded differently - if I had a losing trade I was quite happy to dive back in looking for the next winner, as the loss had not hurt at all. I also find that it encourages overtrading for some personality types. So personally, I ditched demo and went straight to live trading at 50p a pip (I’m in the UK), so was risking small amounts per trade. I then learned the psychology as I went along, as well, and steadily increased the pip size as my confidence increased.
I race cars as a hobby, and also have an Xbox 360, and I find that similar to demo trading - I will take corners flat out on the Xbox that in real life would cause my right foot to lift a little. So while both are fun, for me the learning crossover between the two is limited.
I get that many people say that demo trading makes one familiar with the mechanics of placing trades, using the platform, etc., but really that is not the hard part of trading so I take that argument with a pinch of salt. I never heard of a trader going bust because s/he wasn’t sure how to manipulate their broker screen, but there have been many sunk by trading with bad habits learned through not making sure they had strength in depth and considered psychology, risk, lifestyle and all the other elements equally.
Anyway, I sense that I am in the minority, but I just wanted to put into context this burgeoning myth that the only way to trade is to start with demo, then progress to live when a certain skill level has been reached. Demo can be a helpful tool, but is not a vital apprenticeship and can teach bad habits as well as good. It is all down to the individual - the market is not biased or evil, demo is not good or bad, they are just fixtures to be manipulated by the individual trader, who can be good, bad or indifferent.
ST
Great to hear that it gives me more confidence that demo is similar to live not night and day as some say! Cheers.
It’s just some people think demo account is a waste of time.
So, what your stating is that demo account are better than live accounts on slippage? Guess it depends on brokers performance? And if its only tenths of a pip then there is no worry imo.
Great feedback. 50p a tick is a good idea to start with after a live demo account some say go from paper trading to demo and then live such as Peter Bain? I understand you can get 10p per ticks nowadays would that be advisable or even going to 1p per pip until your really confident in your plan and strategy?
I think the experienced members have given all the good advice so I thought I would point something else out: when and if you are ready to move to live trading, you have to be prepared to lose money. You also have to prepare for consecutive losses. Both can play havoc on your psychology and confidence and something you can’t prepare yourself for in demo. If you can pick yourself up from a loss and learn from it, you’re heading in the right direction…