how do demo accounts differ from real live trading?

Strongly agreed. Trading by itself is very risky activity, you can lose all the money in a few moments. But if you lose another person's money you going to be obsessed with finding the way to return it which can lead to stress that in its' turn will make you trading completely lossmaking.

Exactly. I made this mistake early on. I had been profitable for a while and was getting a lot of offers to trade other people's money.

The first attempt was with an account larger than what I had been trading. The psychological impact of seeing another zero was huge. A 20 pip loss is a 20 pip loss, but it's the zeroes in the dollar amount that screw with your head. I ended up blowing that account trying to make up that first 20 pip loss. Because I was getting triple digit returns monthly, the account owner was expecting the same, so I felt the need to trade larger than I should have as well.

So it was a combination of my not being emotionally/mentally prepared for larger dollar amounts and also feeling the pressure to duplicate my success for someone else and trading higher risk than I should have.

Furthermore, my success was somewhat inflated because I was trading such a small account at 400:1 leverage, I had no problems going high risk for high reward because it was meaningless money to me anyway. But once meaning was attached to the money, it felt like a completely new environment.

Maybe it's just me, but I also experience the same thing when I increase my account size. I regularly add to my account and treat it like a glorified savings account. I'm only shooting for 10%-12% monthly returns, but everytime I add money to it and the trade amount goes up, it takes a few trades to get used to seeing higher dollar amounts rising and falling with each tick. I keep my console showing only pips, but it's inevitable that I'll occasionally get a glimpse. Or subconsciously do the math in my head for $ per pip.

Anywho, the difference between demo and live is huge. The difference between small account live and larger account live can be equally has huge.

And finally, demo trading is good for learning mechanics, and testing ideas, but it's foolish to think you can duplicate your demo results in live results right out of the gate. It's the like the difference between shooting baskets in the drive way and then walking in to game 7 of the NBA finals over night. Well, maybe not that extreme, but it's really a different game.

Anywho, the only real way to know is to get out there and do it.

Would be interested to compare price feed on demo and live account.

Reading from a reply posted earlier, would I really need to demo trade for 2/3 years before going live

I would want to know sooner rather than later that I can take it up for a living rather than a hobby and sit and watch for that long!

I want to be out on that Ducati before I'm too old to appreciate having one.

no not 2-3 years... I would say 2 -3 months but only if in that 2-3 month span you can show you are profitable. If not then what's the point to open a live acct? To prove with 100% accuracy you are no better than 90% of others who try their hand at forex.

forget about the ducati and think more about making enough to cover your monthly internet charges, then internet + water bill, then Internet +water bill + electric bill and so on.

If you swing for the ducati all at once you will probably be homeless within a year. Start small, prove you can do it and then grow the account.

More people quit this game rather than ever make anything significant. Don't be another statistic by showing how greedy you are right out of the gate. Greed will kill you faster than anything in this market.

According to me, demo accounts completely differ from real ones. I am not talkin about technical stuff and conditions, but about that trading on demo, you will not get the real lessons from profits and losses, because they are not real, and you know this. Things are really different when you don't care about them.

Just try it.

Hey Kendeb,
Going live will probably be a religious experience, I know it was for me. I used to be able to double a practice account in two months consistently, however when I went live It's like I changed into a different person.

I started to scalp when I should have been swing trading , I took profit way too early, and losses way too long. It's true when they say that trading is mainly emotions and psychology. I never really believed it since I was too focused on trying to find a holy grail for a good entry. There is no such thing, and even if there would be, how would we compare to the endless r&d budget of Goldman Sachs?

Just make sure when you go live, play with the money you can lose. Don't get hung up on losses, don't set unrealistic goals...they will force you to take bad trades. Treat it as a business, expect losses, they are part of trading.

Don't try to alter your trading style every time you take a loss...it's part of the game. Take screen shots of all your entries and exits and study them...that is how you will learn, not if your system works but if you followed your system. Good Luck

Demo account are good for testing a strategy or fiddling about getting used to a platform. The market prices are essentially the same. However, I did well on demo and felt really emotional however live account I am 10 times more emotional due to heavy thank god small losses. Start really small like .10cents a tick.

Hi Guys

Here is what i see as the difference between demo and live:

In terms of the trading environment, this depends on the broker you are trading with and the quality of their liquidity and price feeds. It depends on if they are a market maker broker or a Straight Through Processing (STP) broker.

You will mostly likely experience a very different environment when dealing with a market maker, because your profits become their losses and your losses become their gains. STP brokers are not concerned with you winning or losing.

The rest of this post will focus on the likely experience you will have with an STP broker.

In a live account you will not always be filled immediately, as there must be liquidity to fill your order at the price you have requested. The more liquidity providers a broker has the bigger the chance you have of being filled at the price you wanted.

The IT software they are using to produce their price feeds. Instant execution gives you better fills than does market execution as their can be slippage.

In a Demo you are filled immediately without any regard to available liquidity. Good brokers will fill you instantly in most cases on a live account.

lastly a live account differs from a demo in terms of psychology. You are risking your own money, and most people are scared of losing their capital. This can be eliminated by funding your account with money you can afford to lose. Does this mean you are going to lose it? no, it means that if you did lose it, you will not lose any sleep over it.

Thanks for taking the time to read this post.

Matt Wilson

hey matt,

one can be profitable and successful in demo or live. Its just the way your brain treats fake money and real money. say u got a big loss in demo, your brain would most likely go open a new account right? you would also be tempted to do things you wont ever tempt to do in live: max leverage everything, and have 5 open trades and just leave them.

Your mindset is different from live and demo. If you have never experienced live, go experience it, go lose the first deposit. Why? thats most of the time where forex traders unlock their holy grail side of themselves and know what they did wrong.

oh yeah make sure thats risk capital, lol not like ur college fund or something
So i say demo trade for just strategy, practice, then go live.

keep in check ur 2 deadly shadows behind you: greed, and fear. Dont be scared to make profit, dont be greedy to make profit. keep them in a balanced way as possible, and trade the way YOU want, learn ur system inside out, learn ur instrument inside out, keep low risk, keep reward high, and go trade dude

need any more help or need anything, drop a pm or go here on my thread: its beginner friendly, we've got sort of a family going on there, u wont find b/s, you find knowledge, experience and i recommend u join or have a read of it

http://www.forexfactory.com/showthre...36#post5043336

start from page 1, if not just introduce yourself, ill give u a brief on what u need to be a forex trader. im not giving u systems/indicators, ill just show you what needs to be understood along with my other mentors and pals. its all learning there mate

i hope u join or at least read

take care

You've answered some of the queries you'd listed. For example, I used a demo account and now do live trading with tradersway ecn platform. So yes, anytime you get a margin call, your account will be debited and if you do not have the required margin, your positions will be closed..think that's the same for both demo and real.

So on the FXCM demo account I'd get a margin call just like if the account were live?

And as long as there is usable margin available, there will not be a margin call- is this correct?

That's correct. In the practice account you will get a margin call just like a real one. Please note, you should never trade with high sums to get a margin call in the first place, because your stop should take you out before your margin call. Always risk less than 2% of your account at a given time.

Yes, that's correct. As long as there's usable margin, your trades should carry through..
And you may want to risk no more than 2%, which is what I prefer when it comes to my tradersway ECN account. Some brokerages have the really irritating habit of closing your positions even when you have the required funds..so you can use the demo account as a sorting tool, before opening a real account - just a suggestion, for that's how I went about it.

As for me the most important difference between demo and real accounts is psychological factor. Dealing with real money is always more complicated than dealing with imaginary pips.

As for me there're three grades of psychological intenseness: a) when trading on a demo account (low); b) when trading on a real account with your own money (medium); c) when trading on a real account with someone else's money (just huge). And I don't think that in the nearest future I'll be capable of trust management.

Demo trading for me is just to familiarize with the platform. That's it. It doesn't teach you how to control your emotions because the money is just a play money, not your real hard earned money that you might or will loss.

Demo = Playing war video games
Live = Deployed in a warzone like afghanistan

Happy Holidays!!!

Do you guys keep the demo accounts for ongoing practice even after you open a live account (to hone your skills and such)?

I think it's a good idea to have demo accounts of brokers you're interested in. Even if you have a live account which you're happy with it's always useful to keep searching of even better trading conditions.

As "xtrader101" put it, I would suppose demo trading is like a video game with no real life consequences, and live trading is the "big boy". How about "playing" a live account as if it's a demo account? How cool would that be?