When I first got interest into Forex Trading, I was using demo account, and I told myself that when I am very good at demo account I will move to Live account.
I did that, but after I moved to Live account i got losses… many losses. I lost 2 accounts deposited money… When I told myself that I am going to start learning only with Live accounts. Demo and Live accounts are not the same even if you say that I am using demo account but I treat them as real money It just doesn’t work that way. Real money is real, fake money is fake. We act differentely to those parameters.
I would like to know how many of you have the same problem? Do you agree with me that it is better to trade with little amount but go straight into live account?
There is a psychological difference between live and demo trading as you have found out. Demo accounts are very useful to learn how your platform works.The demo account is also useful tool along side a live account especially when learning. Trading a small live account will acustom you to the feel of the trade, and a demo can help with confidence. Never take a live trade unless you are confident that it conforms completely to the rules of your system, But NEVER use a demo account to gamble or play. If you want to tweek your system then the demo comes into its own
[B]Experience is a tough teacher. It gives you the test first, lesson afterwards.[/B]
I really believe in the above. Sometimes you just have to give it a shot (after sufficient prep and learning ofcourse). Live trading is the real test.
This is where I am right now… I have funded my mini account with a good amount of equity to trade micro lots. I have two systems that I am good with trading (not mine, sunday break outs on GBPUSD and GBPJPY)
I think I’ve just learned as much as I can with the motivation a demo account can inspire in a trader. There is more drive to learn, observe, deliberate and think out trades with a live account. It’s like the difference between a practice standardized tests and the real day. It’s can be very different. Key aspects are emotions, patience, and ofcourse real risk with money.
I will use demo for testing indicators and EAs, or trying out a new strategy. But practice and real learning will come from live trading.
As well, as I began to learn, it’s all about the Money Management.
Demo vs Live is actually more than just psychological.
It is psychological + actual live server dynamics latency
factor. Live server just reacts differently than a demo
account because, well, live server is live. Live money
traders and liquidity providers are trading on it.
For that reason, live server will always react differently
than the usually slower demo server where really, nothing
of consequence occurs. You learn the basic mechanics of
your chosen platform and get used to it on demo but
you really do not learn much on demo. Much better
to graduate from demo as soon as possible and go live
with a small deposit. Live server also totally reacts
differently and it reacts faster than the demo server.
And every broker puts more resources to their live
servers to their live paying real money customers.
The term “reputable” is thrown around way too
much without a lot of real world meaning to it.
And the firms’ reputation has nothing to do
with it. Demo server always reacts differently
than the live server. Actual live server technical
latency issue plays far more into this than most
people realize. Demo server does not react the
same as the live server. The myth that demo is
the same as live must end. This is why so many
newbies have demo server overconfidence and lose
their shirts on live accounts.
Yeah I agree, but when I am familiar with trading platform, then it is better to use live account even though it is a small fund - but still better than demo:)
I spent about a week on a demo account before moving to live. My learning curve improved drastically when my money was involved. I still use my demo account for trades that I want to make, but am not to sure of. Ill be using it when I try to get a good system going, currently Im just trading patterns and trends.
I have been demoing for nearly a month now. I notice I get careless and ‘game’ the trades, which is needless to say bad for training discipline.
I’m going to deposit some pocket money into OANDA to get a pinch of live trading. Hopefully I can be more responsible
Of course demo account, but before you start trading real money, you should trade for months if not years a demo account until you learn and feel comfortable with technical analysis and fundamental analysis (economic fundamentals, CPI, PPI, GDP…) You also must follow the news of both currencies in the pair (example EUR/USD, USD/JPY) The next thing you need to do is create a strategy with money management control. Since now a year or two have passed and now you understand the currency, you can start trading real money. Make sure you do all of this with extreme discipline.
Yes discipline, determination, psychology are my keys to success. My strategy is support and resistance breakouts and rebounds. I don’t do fundamental analysis, I am a technical trader.
Thanks for the comments. However, I do disagree with two years or one year trading with demo account… thats too long. It is better to jump straight in Forex and get a cold shower earlier rather then it is too late.
While it would obviously always be silly to trade with money you can’t afford to loose, before you get the hang of it, but I think you might find that on a per hour basis your investment in time will far outstrip your capital investment.
Demo accounts lack the emotional connection that can only be created trading with your own funds.
Far more realistic, even if you only trade 0.10 per pip:-}
You know I was just going to mention that. In the end it’s all about your risk. Real serious trades, I use micro lots. For practicing my skills in live trading, I will use smaller lots (1-3 cents/pip) with which to trade. Psychologically I still take it seriously, but I’m not stressing over major losses. And hey, making money no matter what amount feels good. This way you can trade a little more relaxed.
Of course, one could argue that the the more you lower your risk, the less real it really it is. But I have found for me, I take all my live trades seriously regardless of the lot size. I’m just not completely stressed out with losses.
It’s not the way I did it, I never would, I’ve always learned from my mistakes, and it has nearly always cost me dearly, but I think you should only go live when you are profitable in Demo, how long for depends quite a lot on your strategy, I’ll give a shot at a possible ratio:-
Trades Lasting less than 1 minute, 4 weeks profitable on demo.
Trades lasting up to 20 minutes, 2 moths profitable on demo
Trades lasting up to 4 hours, 4 months profitable on demo.
Trades lasting up to 24 hours, 6 months profitable demo.
It just doesn’t work that way. Real money is real, fake money is fake. We act differentely to those parameters.