How different is DEMO vs. LIVE account trading | Forex Factory

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How different is DEMO vs. LIVE account trading

  • #1
  • First Post: Sep 28, 2009 7:37pm Sep 28, 2009 7:37pm
Hi,

I am a newbie and would like to know how differnt it is to trade on LIVE account compared to a demo aside from the fact that with LIVE you are dealing with real money and you become more cautious.

thanks
sam
  • #2
  • Sep 28, 2009 8:10pm Sep 28, 2009 8:10pm
Quoting rgv_2009
Hi,

I am a newbie and would like to know how differnt it is to trade on LIVE account compared to a demo aside from the fact that with LIVE you are dealing with real money and you become more cautious.

thanks
sam

DEMO ACCT - not dealing with fear and greed.
LIVE ACCT - dealing with fear and greed.

throw $20 into an oanda account and try it LIVE.
taking series 3 and 34
  • #3
  • Sep 28, 2009 8:45pm Sep 28, 2009 8:45pm
Technicall differences are:

Live accounts. pricing feeds are streaming and as acurate or close to the real market as possible.

Demo account, price feeds may be lagging or outright inaccurate.


What makes the real difference:

What makes the real difference is Psychological. When dealing with "fake" funds, traders tend to be liberal in their risk and rewards rules. You are able to experiement with ideas and loose or gain as much as you like by maxing out your LOTS. But when dealing with real money, money that you had to work hard to get, traders tend to be a lot more cautious taking an entry or exit position. It make's a trader think about with actions and what the consequences are or will be for his/her actions. I idea of blowing up your account have a tendency to run rampage though the minds of Live account traders.
  • #4
  • Sep 29, 2009 1:55am Sep 29, 2009 1:55am
The difference is in your head. Mostly brokers tend to have the same conditions and quotes on demo and real accounts.

But the cost of the decision at real account is measured in your own money which makes you err... nervous. Apart from that - still the same charts, orders, quotes, everything.
  • #5
  • Sep 29, 2009 2:18am Sep 29, 2009 2:18am
quote:
throw $20 into an oanda account and try it LIVE.

this may not work either as the amount you are trading with is too small, it won't matter to you too much to lose this, so you will find yourself easily breaking your rules with bad money management.

I would say open an account with no more than 1000 dollars worth of capital and trade 0.01 lots and keep it that way until you have doubled the account, there is no point trading larger lots.

This is difficult to do but will stop you from needlessly losing larger amounts of cash.

Cheers J
  • #6
  • Sep 29, 2009 3:11am Sep 29, 2009 3:11am
The only way to know is to try. You can not possibly explain the difference between demo and live trading, in a forum post. Why, simple, everyone reacts differently to live trading, there is no common reaction or common explanation.

One guy can move from demo to live and not have a problem at all. Another make struggle for years.

Only way to know is to TRY.

-snacker
  • #7
  • Sep 29, 2009 4:02am Sep 29, 2009 4:02am
Quoting thesnacker
The only way to know is to try. You can not possibly explain the difference between demo and live trading, in a forum post. Why, simple, everyone reacts differently to live trading, there is no common reaction or common explanation.

One guy can move from demo to live and not have a problem at all. Another make struggle for years.

Only way to know is to TRY.

-snacker
While I have a live account that is my main focus, I still run a demo even after more than 3 years trading. I use it to test new ideas but I find I'm as pissed off with making a mistake in the demo as I am in the live account.

It may be that this comes with time. If I do something stupid when I enter a demo trade I realise that I can't afford to duplicate that error when trading real money. So, nowadays, for me, there really isn't any mental difference between live and demo.

At least demo trading allows you time to sharpen your method, learn from your mistakes (hopefully) and prepare yourself for the real world. Don't go live until you've demo traded for at least three consecutively profitable months and then start with the smallest lot size you can.

At this point all you are looking to do is learn to trade profitably; the bigger prize will follow.
  • #8
  • Sep 29, 2009 5:01am Sep 29, 2009 5:01am
Quoting PeterFM
While I have a live account that is my main focus, I still run a demo even after more than 3 years trading. I use it to test new ideas but I find I'm as pissed off with making a mistake in the demo as I am in the live account.

It may be that this comes with time. If I do something stupid when I enter a demo trade I realise that I can't afford to duplicate that error when trading real money. So, nowadays, for me, there really isn't any mental difference between live and demo.

At least demo trading allows you time to sharpen your method, learn...
Yup, I do both demo and live, have different demo and live accounts for different strategies and testing.

-snacker
  • #9
  • Oct 2, 2009 1:40am Oct 2, 2009 1:40am
Just to make some fun here. On a demo account most of the trading strategies you can find around make you demo-millionaire, on the real account the same strategies make you real-loser.
  • #10
  • Oct 2, 2009 3:52am Oct 2, 2009 3:52am
you know, people say that there's no much diference in real or demo account. It's just on demo you risk virtual (not real, not your) money.
even trading news are the same
  • #11
  • Oct 2, 2009 11:22am Oct 2, 2009 11:22am
i made 6000pips on demo cos i forgot to check the platform for six months...lol
  • #12
  • Oct 2, 2009 11:29am Oct 2, 2009 11:29am
Call me strange, but I care about pips and not about cash. I get the same happy feeling when I profit on a demo account as when I make actual money. Likewise, I don't feel the difference between life and demo losses.
The nail that sticks out gets hammered back in
  • #13
  • Oct 2, 2009 11:54am Oct 2, 2009 11:54am
mt4 demo is good for learning what forex looks like and acts like

i always suggest fxcm micro, you can't really beat them. really low spreads and minimum funding is 25 bucks and you can fund via paypal/credit card. available same day for the most part.
  • #14
  • Oct 2, 2009 2:57pm Oct 2, 2009 2:57pm
Quoting Noloqy
Call me strange, but I care about pips and not about cash. I get the same happy feeling when I profit on a demo account as when I make actual money. Likewise, I don't feel the difference between life and demo losses.
Right, that's only true till you open live one. It's totally different and
I mean absolutely. Every one is good playing peanuts..

I tell you even more, that every one should start with live account

mini account 0.01 lot will give you ability to play 1 cent per pip. I don't think you going to

cry losing 40 cents or so, but at least it's very close to reality. Ones you

feel better, you can always increase lot sizes.. Besides execution is very different between Live and Demo.

Demo will execute your order even while pair is rapidly moving and live account will give you "Off quotes" Error,

cause when you push that button, pair should be still and not in move in any direction.
Viewer Discretion Advised: Shall we shag now or should we shag later? :-)
  • #15
  • Oct 2, 2009 3:59pm Oct 2, 2009 3:59pm
45) Staying in the Game – I don’t recommend demo trading because traders learn bad habits when trading with play money. I also don’t think “letting it all hang out” right away is wise either. Start off doing trades and taking risk that is relatively small but still makes a difference to you if you win or lose; about a quarter to a third of what you expect to reach as your trading matures is reasonable.

http://www.forexfactory.com/showthread.php?t=5938

Its a different ball game when you are playing with a live ac versus a demo. Not many will be cool when their platform/computer/internet crashes during a live trade. Yep, everyone there says treat the demo like real and real like demo. But, not all of us can do that.

Use a demo to get a feel of the platform, order entry/exit/management, etc. Then move on to a real ac with a small but significant amount for you to feel the "heat of the kitchen".
  • #16
  • Oct 2, 2009 7:24pm Oct 2, 2009 7:24pm
Re the psychology, I can have a live trade go $50 against me, and it doesn't bother me any more than in demo. I've proved that to myself, on several occasions.

But if I was trading at 100x that level, i.e. $5,000 down, then I KNOW that my emotions would overrule my trading decisions.

So my 'comfort threshold' lies somewhere between those extremes, and the only way I'm going to find out for sure is to try!

I suspect that each individual has a different comfort threshold, and that much probably depends on his financial situation, and appetite for risk. I also suspect that most people's threshold is a lot lower than what they might think.
  • #17
  • Oct 2, 2009 9:16pm Oct 2, 2009 9:16pm
Compare the difference to a mild stomach burp and hanging your head in the trash basket and heaving your guts out.

Demos are for learning a trade platform, not to gain experience.
  • #18
  • Oct 3, 2009 4:43am Oct 3, 2009 4:43am
Quoting hanover
Re the psychology, I can have a live trade go $50 against me, and it doesn't bother me any more than in demo. I've proved that to myself, on several occasions.

But if I was trading at 100x that level, i.e. $5,000 down, then I KNOW that my emotions would overrule my trading decisions.

So my 'comfort threshold' lies somewhere between those extremes, and the only way I'm going to find out for sure is to try!

I suspect that each individual has a different comfort threshold, and that much probably depends on his financial situation, and...
True. However, the greater the size of your account, the greater the threshold will be. Thats why you should risk a fixed percentage that you feel comfortable with. Set a stop-loss, and stick with it. In my opinion this is about the closest you can get to "emotion free trading".

Maybe the above is a bit too utopic, but learning to "love your losses" is one of the best traits to becoming a successful trader in my opinion.
The nail that sticks out gets hammered back in
  • #19
  • Oct 3, 2009 5:05am Oct 3, 2009 5:05am
Quoting PeterFM
........... for me, there really isn't any mental difference between live and demo.

At least demo trading allows you time to sharpen your method, learn from your mistakes (hopefully) and prepare yourself for the real world. Don't go live until you've demo traded for at least three consecutively profitable months and then start with the smallest lot size you can.

At this point all you are looking to do is learn to trade profitably; the bigger prize will follow.
Peter, I learned a lot from your thread. Still read your posts over and over agian.

Demo traded for about 7 years before opening a real account (no, it is not a typo, it is seven). Then opened and busted a real account. Went to micro accounts. Busted six or seven of them. Then re-started and busted my account again. Then again went back to demo for another eleven months before re-starting.

Trading is my profession now. The major success factor as you mentioned above was to keep my position sizes small, very small, very very small.

I don't know how to thank you for your advice. Maybe my this experiece helps someone who reads this post.
The Thief of Wall Street
  • #20
  • Oct 3, 2009 5:14am Oct 3, 2009 5:14am
Quoting Chicky
Peter, I learned a lot from your thread. Still read your posts over and and over agian.
You must be a sucker for punishment .
Quote
Demo traded for about 7 years before opening a real account (no, it is not a typo, it is seven). Then opened and busted a real account. Went to micro accounts. Busted six or sevenof them. Then re-started and busted my account again. Then again went back to demo for another eleven months before re-starting.
So far, one live and one demo for me. I fight tooth and nail not to let this happen again, so my demo account is just as important to me as the live one. If I blow another demo then I will have to rethink what I'm doing. I want to move away from taking shorter-term trades (1 - 3 days is short for me) and find ways using S/R that will let me hold for weeks. That's the point of the demo, to try out new ideas and strategies whilst building the live account slow but sure.
Quote
Now trading is my profession. The major success factor as you mentioned above was to keep my position sizes small, very small, very very small.

I don't know how to thank you for your advice. Maybe my this experiece helps someone who reads this post.
It's good to know that my main aim when starting that thread was to help at least one person make a success of this. If you are that one then I feel satisfied.
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