Suspicious of Demo Account results

Hello everybody. I am a newly born, 4 day old trader with a demo account at FXCM. I am a bit suspicious of my successful results. Out of @ 20 - 25 trades, I have only lost on two, on the first day.

I employ a very conservative strategy, with a goal of consistently winning a series of small profit-takings. I want minimum exposure with almost all trades closing within 4 hours.

I enter close to the market price and set a profit target not far off. My trades do tend to close within my 4 hour window. In fact, since those two mistakes on the first day, I have not lost. So far it has been a boring but consistently winning strategy.

I observe the money management principle that says do not expose more than 20% of your equity, or in quick and dirty terms as I understand it, always maintain a usable margin of 80%. This is to avoid overleveraging and thereby avoid margin calls. I have never had a margin call.

I started with the usual $50,000 balance in the FXCM demo account. To day, the 4th day, the balance is just over $55,000.

I asked the FXCM help desk if the same rules re margin calls apply to their demo account as to their live account and they said yes.

I realize my style of trading is instinctive and is technical (not fundamental). I have already experienced once how the fundamentals can shock the market and throw all technical analysis out the window. I went long on G/U which made sense from my instinctive view until the bad housing data came out in the UK and clobbered the pound. At one point, I was -3,500 on that lot. 28 hrs later I closed it at +510.

My basic concern is: it can’t be this easy, or else everyone else would be trading and making money.

Put it another way, is it possible that a demo platform be programmed to provide falsely successful results in order to lure beginners into depositing live money into a live account? Well, I know it’s technically possible, but has anyone heard of that actually happening?

Thanks, an absolute beginner perturbed by “too much” success. I would appreciate any of your thoughts or lessons learned the hard way.

You probably need not worry about false trade results or anything like that. Most demo platforms these days do a good job of modeling the prices and whatnot that you’d see trading live. I would make two points in regards to your success so far, though.

  1. Too small a sample size.
    You need to be working your strategy for months to get a true gauge. A couple of days doesn’t represent enough different types of market conditions and price action.

  2. Live trading is different.
    This might sound contradictory to what I said at the top, but I’m not talking about the technical side. I’m talking about what’s going on in your head. Having real money at risk does strange things to your decision-making. That’s why I’ve always suggested that new traders do some really money (very small amount) trading as soon as they are comfortable with the mechnaics to get an understanding of the psychological impact it will have on their trading.

Yes. i wouldn’t plan to go live until after 2 - 3 months of successful demo experience. Another poster had a good suggestion to use a mini demo account with a realistic amount of money that you would really deposit and see how that affects overleveraging.

Re: psychological difference between demo and live. Yes, many posters seem to warn about that. That will be very interesting for me to experience.

Thanks for advice.

I want minimum exposure with almost all trades closing within 4 hours.

At one point, I was -3,500 on that lot. 28 hrs later I closed it at +510.

I have picked out these two points because if your system states
that you will close all open positions within 4hrs, why wait on G/U?

If it was a live account with -$3500 would you have sat &
waited just in case this trade reversed?

Also have you $50 000 to invest in forex? If yes you need to look more @
an ECN, but I would think not. Therefore practising on a $50 000 account
is pointless.

Yes it’s a demo account, but you need to be more realistic.

Anybody should be able to make money on a demo account with that large
an account size.

I would also download MT4 from any source, or another demo account
just to put your mind at rest that all these “wins” are correct.

I hope you do not think I am going over-board with this reply, but
forex is a business with real money at stake, you need to treat it


  1. I want most trades to close w/i 4 hrs. I no nothing of the G/U relationship, but I gather from your comment that this pair tends to require significantly longer exposure times. thanks for the info.

  2. A live account at - 3,500? It depends on how bad it got. I could hold on hoping for an eventual reversal but sooner or later I would get hit with a margin call, not to mention any rollover interest.

  3. I do not rush to sell an asset just because it goes south. There are usually reversals. I do observe the money mgmt principles to have plenty of usable margin to hopefully cover unexpected nasty reversals until they turn back in my direction.

  4. I like the idea of a mini demo account with a realistic initial balance and see how the overleveraging works there under more realistic conditions. Thanks for the MT4 tip.