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Demo trading vs Live trading

  • #1
  • First Post: Feb 24, 2010 8:39am Feb 24, 2010 8:39am
I know you are going to say that this question has been asked before.
However I'm opening this new thread just because I would like to have the most updated opinions about this.

I'm trying few demo accounts for about 4 weeks and everything is looking pretty. I know that the live trading is different because everyone is saying this but where are these differences?

Is the market moving the same?
If not, how big is the difference? (number of pips, time....)
What are the big differences between Demo and Live?

I'm trading 4 pairs on 4 hours charts:
EUR/USD, USD/CAD, GBP/USD, USD/JPY

I use few advises form here but I do not have anything automatic.
I'm making between 100 and 250 pips a day trading with 1 standard lot/order. All my demo accounts are having 10,000$ and I'm not using stops.

Everybody is talking about how complicated is to trade using a live account but I would like to know WHY

Thank you in advance for you time and your answers
  • #2
  • Feb 25, 2010 12:37am Feb 25, 2010 12:37am
Demo trading is leaning back in the chair, hands clasped behind your head, watching the virtual money roll in while you drink a beer or two and tell your mates what a great trader you are.

Real money trading is nail biting, brooding, skulking about, kicking the dog and arguing with your woman about how much she can spend, or whether the rent is going to be paid.
Gone to a better place
  • #3
  • Feb 25, 2010 12:41am Feb 25, 2010 12:41am
Quoting SavioRoca
I know you are going to say that this question has been asked before.
However I'm opening this new thread just because I would like to have the most updated opinions about this.

I'm trying few demo accounts for about 4 weeks and everything is looking pretty. I know that the live trading is different because everyone is saying this but where are these differences?

[color=black][font=Verdana]Is the market moving the same?...
hola..SavioRoca
so what stopping u from using live acc? heheheh
  • #4
  • Feb 28, 2010 11:25am Feb 28, 2010 11:25am
Dumb question, fake trading is still trading in live time correct? except with fake money. Your still trading like a real trader, as things are happening truly in the market your going to be the same way
  • #5
  • Feb 28, 2010 11:37am Feb 28, 2010 11:37am
Quoting TimmyZ1
Dumb question, fake trading is still trading in live time correct? except with fake money. Your still trading like a real trader, as things are happening truly in the market your going to be the same way
Yes of course but there might me some small differences, for example there can be some milliseconds-seconds delay executing trades in real life(also re-quotas, slippage), depends how fast the markets are going and depends on the broker, but overall, yes you will get the "real" thing 99%.

DONT forget, that its the PSYCHOLOGY that is missing in the demo trading. YOU WILL NOT trade it the same way. You dont have real GREED / FEAR in the demo! You will be the weakest link in trading...not the market conditions!
  • #6
  • Feb 28, 2010 12:13pm Feb 28, 2010 12:13pm
Quoting SavioRoca
Everybody is talking about how complicated is to trade using a live account but I would like to know WHY
Others have already mentioned, but let me reinforce the point. The #1 predictor of your success, or failure, is your psychological sate of mind.

Virtually no human is born with proper mindset, so training is a prerequisite. Unfortunately, this must be done during the heat of the battle / on the job training. Demo trading is actually harmful, IMHO, for most of us for this very reason.

When I started Demo trading, I was pulling in $1500-2000 ever 2 weeks with a $10K base. After fantasizing about telling my boss to screw herself, picking out which sports cars I was going to drive, which city I was going to line in, what size yacht I wanted, what brand of silk underwear I going to wear, and which island retreat I was going to visit every few months... I went LIVE with all the bravado of post-pubescent teenager in the presence of really drunk, hot chick...

Just under 2.5 months later, my $10,000 of real money was down to $1500 and had experienced my first margin call. You are free to think, "Yea, right, but I'm not as stupid as you." But, after you've made your market donation, kicked yourself in ass for weeks and cursed the womb the spat you forth into this unforgiving / uncaring world, it is then you'll find out if you are ready to START the training.
  • #7
  • Feb 28, 2010 11:57pm Feb 28, 2010 11:57pm
Demo trading is what you do to get used to the broker platform, develop an understanding of how the market works and get comfortable trading a method that provides a consistent track record of profit.

The important thing to do with demo is not to kid yourself. If you dont have $50K start up capital then dont trade a $50K demo account, you will develop habits of trading incorrect position sizes and expectations of returns that you will not get in a live account if you are starting with less capital. Practice trading a demo as if it was a live account.... exercise money management rules etc. to teach yourself good habits from the start.

I have this argument with people all the time telling me that demo is a waste of time. I agree that wins in demo do not translate into wins live, but losses certainly will. If you dont have a method that gets consistent profit live then adding the pressure of real money on top aint gonna fix it.
  • #8
  • Mar 2, 2010 7:12pm Mar 2, 2010 7:12pm
Quoting Slack
Others have already mentioned, but let me reinforce the point. The #1 predictor of your success, or failure, is your psychological sate of mind.

Virtually no human is born with proper mindset, so training is a prerequisite. Unfortunately, this must be done during the heat of the battle / on the job training. Demo trading is actually harmful, IMHO, for most of us for this very reason.

When I started Demo trading, I was pulling in $1500-2000 ever 2 weeks with a $10K base. After fantasizing about telling my boss to screw herself, picking out...
I agree with Slack, its about getting your personal psychology right.

I traded demo accounts for a good 12 months on and off, and as much as i tried to believe it was real money, it didn't work, i made risks/trades I really shouldn't have.

Demo in my opinion is counter-productive to changing your personal psychology makeup.

My advice, sign up to a broker who allows micro lot trading as low as 0.01 per pip, and trade that way.

It will help with re-wiring your brain.

If you are a complete beginner, then yes use a demo account until you understand the basics, such as support/resistance lins, trend lines and some indicators like fibonacci.
  • #9
  • Edited Mar 3, 2010 5:54am Mar 2, 2010 9:57pm | Edited Mar 3, 2010 5:54am
Quoting SavioRoca
I know that the live trading is different because everyone is saying this but where are these differences?

Everybody is talking about how complicated is to trade using a live account but I would like to know WHY
Let's try an analogy:
Remember when u were a young teenage boy. You dreamt of sex and your fantasies were fueled by 'viewing Dad's copy of playboys' you found in the garage and hand lotion
Then you finally convinced some girl to let u have sex w/ her. (I hope this is the case or you wont get the point of the analogy). Now you have a girlfriend - and the real work begins -LOL

Now do you understand the diff between Demo and Real?
In trading, there is no bullshit. You either make money or you don't.
  • #10
  • Mar 4, 2010 8:27pm Mar 4, 2010 8:27pm
In live accounts spreads may not be the same as on demos, same with leverages. Make sure you confirm this your broker 1st.
Trades may also take longer to open and to close in live accounts.
And then you have the human factor, its easy to see negative trades in demo accounts, but on live ones its a diferent story, and that will affect how you trade. Start with micro accounts for a month or two first, nothing is better than you own experience.
  • #11
  • Mar 5, 2010 10:25pm Mar 5, 2010 10:25pm
Quoting SavioRoca
I know you are going to say that this question has been asked before.
However I'm opening this new thread just because I would like to have the most updated opinions about this.

I'm trying few demo accounts for about 4 weeks and everything is looking pretty. I know that the live trading is different because everyone is saying this but where are these differences?

[color=black][font=Verdana]Is the market moving the same?...
The market moves the same there's no difference except the execution of the trade, for instance say you place a Market buy Eur/usd 1.3000 for 50,000 units you may not get all the units filled for 1.3000 because the execution isn't instant or there wasn't someone to take the other side of the trade at that moment. The difference is often very minimal fraction of the pip depending on the order size.

Don't trade too many pairs, it makes the game more difficult. Too much information to analyze too much information to take in overloads the Brain. Some people can trade many pairs, most can't though. That doesn't mean you shouldn't branch out and try other pairs. Better to get used to one first.

If your planning to invest 10k when you go live, I recommend trade with 5k have the other 5k in reserve for when your about to get margin called. There will be times when a margin call is a real possibility especially in the first six months, trust me.

With Live account's you must battle your emotions, it sound's easy but it's difficult, emotions often cloud your Judgment and will F**K you hard when you slip. There's a great deal of stress when you go live, especially when you slip and lose your hard earned money. Don't chase the market. Patience is a virtue.

When you go live I HIGHLY recommend you use less leverage,this is because most traders use several entryS to get into a position rather then one single bet.Also you go with a broker that lets you trade MICRO lots, or one that let's you define your own lot sizes.Why? Well if a broker forces you to use say a standard or mini lot this means with a 5k account.

10k Mini lot = X2 leverage

When you have two entries your position turns to 20k and you've already used 4X leverage! This makes the game more difficult as you have less room to maneuver, and more likely to get wiped out if the market goes against you. Check out Oanda I use them. Last thing stay away from day trading, Day trading's extremely profitable for the PROS, it can also wipe you out with haste.
  • #12
  • Mar 8, 2010 8:04pm Mar 8, 2010 8:04pm
The main difference between demo and live trading is the emotions.

You will not feel the heat when you get stopped out in a demo account and you will always allow the profit to run fully.

However in live trading, you are dealing with your own real money that can be use to buy food or other things for yourself. Once you see yourself in the red or get stopped out, you will get emotional and want to get the money back. This is when revenge trading occur and you enter a trade even when the setup is not in your trading plan hoping to get the money back.

This kind of revenge trading is what kills a new trader.

In live trading, you will have the tendency to grab a small profit as you are afraid that the market will move against you taking back the profit. This action will reduce your win loss ratio and thus make you less profitable for the month.

There is definitely a great difference in live and demo trading. Therefore it is best for any new trader to start with a micro account first before moving to standard account.
  • #13
  • Edited 1:11am Mar 9, 2010 12:02am | Edited 1:11am
Hello Savio Roca - your name reminds me of a very good footbal player who once played with the Collingwood Football Club (Melbourne, AFL) - Sav Rocca.. anyway.

I think it is easy to answer this question in saying "it is about psychology and emotions" but I like to think of it in more practical and tangible terms than that..

For a start I think you need to be crystal clear about what is the purpose of trading in DEMO mode. For me, it is to test the capability of my method. This involves:

1) Testing the actually mechanics of my entries and exits, to see if they perform to expectations. What is working, what is not, and how should it be changed?

2) Testing the capability of ME. (Maybe a bit of pschology here but it doesn't need to be too much.) On a practical level, you want to find out what sort of trader you are - do you respond well to short or long term trading (etc)? What are you comfortable with?

If you can be clear about purpose when using demo mode, then you are far more likely to gain something useful from the experience, other than "practice" which really doesn't mean much. Of course there is nothing like trading LIVE to sort you out, but if more people traded in DEMO with a clear and defined purpose, AND took neccessary actions to adjust their method along the way BEFORE going live (a whole new topic in itself here), I suspect we would have far less discussion about 'emotion' and 'psychology' on forums like this - they are easy and obvious 'culprits' to point to in bad trading results, but sometimes might just be the visible symptoms of an underlying problem such as bad process.....and you don't have to be Einstein to work out whether trying to fix the root cause or the symptom is a more productive way to spend your time.... just my 2 cents worth.
  • #14
  • Mar 9, 2010 7:42pm Mar 9, 2010 7:42pm
Quoting mrgreen
Let's try an analogy:
Remember when u were a young teenage boy. You dreamt of sex and your fantasies were fueled by 'viewing Dad's copy of playboys' you found in the garage and hand lotion
Then you finally convinced some girl to let u have sex w/ her. (I hope this is the case or you wont get the point of the analogy). Now you have a girlfriend - and the real work begins -LOL

Now do you understand the diff between Demo and Real?
  • #15
  • Mar 9, 2010 10:12pm Mar 9, 2010 10:12pm
Do not let greed clouded our mind.
  • #16
  • Mar 14, 2010 5:24pm Mar 14, 2010 5:24pm
Quoting smikester
Demo trading is leaning back in the chair, hands clasped behind your head, watching the virtual money roll in while you drink a beer or two and tell your mates what a great trader you are.

Real money trading is nail biting, brooding, skulking about, kicking the dog and arguing with your woman about how much she can spend, or whether the rent is going to be paid.

  • #17
  • Mar 15, 2010 10:55pm Mar 15, 2010 10:55pm
As someone that just started with "live" trading, I agree with whats been said. Emotions are the primary difference, on live Ive pulled out of trades and tightened up stops too early several times that I probably would not have on demo. This cost me 100 pips yesterday, but hopefully I will learn.

I have had a few re-quotes and other minor issues, but the biggest barrier is me. Price action is still price action and the charts might be a little choppier, but they are basically the same.
  • #18
  • Last Post: Aug 6, 2011 4:05am Aug 6, 2011 4:05am
Quoting johto
DONT forget, that its the PSYCHOLOGY that is missing in the demo trading. YOU WILL NOT trade it the same way. You dont have real GREED / FEAR in the demo! You will be the weakest link in trading...not the market conditions!
Exactly - here is your answer...
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