Demo Trading Is Not The Same As Live Trading
Don’t spend too long practising your trade with your demo account because demo trading is not the same as live trading, period.
One important thing to take note, a demo account behaves very differently from a live account. Take what the brokers say about demo trading with a pinch of salt when they say it tries to simulate as close as possible to the live market.
It’s good for those of you that are new to Forex trading or the trading platform.
However, don’t wallow too long in demo trading if you are serious about trading.
I know there are some who encourages new trader to be consistent and profitable in demo trading before moving to live account and I have to Disagree with that.
Let me ask you, how long are you going to take? Weeks, months, years? There are some whom I know have been demo trading for ages and have never made the switch over to live. Don’t be the next one if you are serious about Forex trading!
Why Demo Trading Is Not The Same As Live Trading?
A difference in performance is very likely due to trader related or trade execution.
With a demo account, there is no real money involved and believe me, when it comes to your real money, your emotion is very different!
It’s now your money and you could be a very different person when it comes to risk and reward, entry and exit, money management, trading lot size. All your strategies that you have been practising in your demo trade could be thrown out of the window the instance you go live, believe me.
Differences in Execution Between Demo and Live Accounts
- The Forex broker may not re-quote a price in demo whereas they may often re-quote live prices.
- Price feed and spread will be different for live account. Believe me, I have tested enough demos and live account.
- Stop loss in demo is accurate whereas you may have to deal with slippage in live account.
- Broker errors may occur but you choose to ignore them since it’s not live and you are not bothered with the outcome but it will be a very different situation if it involves your money. And errors do occur from time to time.
However, the benefits of demo trading cannot be overlooked.
It’s a very useful tool for not only for beginners but also season traders to test out the platform and also great in testing out strategies and EAs to make sure they are working in real time before switching over to live.
Demo Trading Is Not The Same As Live Trading – What’s Next?
You can start off with a micro or even nano account offered by some broker. By starting with a small deposit, it allows you to test out your strategies and the broker with a small amount of money and getting a feel of the live trading environment provided by the broker. And you also get the real feel trading with your own money, the emotions involved.