Why Demo Account Seems To Differ From Real Account
Welcome back to my blog. Today I will address one of the frequently asked questions about how demo account seems to differ from the real account for many traders. I have traded both accounts (obviously).We all start with a virtual account then move to the real account as soon as we feel ready. I think it makes more sense to share my own demo Vs real account trading experience and also of those that I have recently spoken to regarding this subject. It was a week ago when I spoke to one of my mentees who has been on demo account for a couple of months now, this is what he said
“Effects of being on demo for a long time are not good. It’s easy to ignore the rules and be not focused. That’s what I have realized. I need to be on live as soon as possible. Strategy part of trading can be mastered on demo, but the emotion part is not covered at all and it is the most important part of trading″
I fully agreed with him because that’s exactly what I noticed with my own demo trading experience. When I was still on demo account I thought I was just going to cruise on real account because of how I perfected the skill on demo account and the amount of time I spent trading on demo. To my surprise, that was not the case at all. As soon as I started with the real account, my confidence went out of the window. I started to worry and the fear started to cripple in. The outcomes from my trading suddenly changed drastically. Last week Friday, I was talking to my other mentee who has been trading live account for some time now but she still has some challenges there and there that she needs to overcome. She still does check in on her demo account sometimes (it happens when you are scared to just enter a trade on real account or maybe when you are not trusting your own analysis at the time). She actually inspired this post and I told her that I will write this blog post and feature her comments on the demo Vs real account matter. This is what she said just after we traded our 3rd Canada CPI and I was doing a follow up on how she did (I trade together with my mentees)
“I went to demo and made a lot of money. Sometimes I don’t understand why I make so much money on demo account using the same strategy”
My conversation with her went on and on and I was telling her why she needs to forget about demo trading now and focus on acquiring the experience needed for real trading account. The main reason why she makes more money on demo account using the very same strategy is that she is emotionally relaxed when using the virtual money that comes with demo account than when she is trading her own money. I know it was the case with me as well and so it is for many traders out there. There’s a thin line between being careful and being scared and scared money never makes money.
Benefits Of Demo Account
There’s a lot that a newbie needs to learn as far as Forex market is concerned. Brokers do provide a virtual account which comes with virtual money for practice/learning purposes. Demo/virtual account does give an idea of how the live trading account operates. A newbie will actually get a feel of how the buying and selling are done in the markets and that’s the benefit of learning from a virtual account without risking your own money. The reality though is that the experience/ success that you might achieve on demo account does not indicate the live/real account experience/ success. It is advisable to practice/ learn using a demo account with the understanding that how you perform on demo account has got nothing to do with how you’ll perform on real/live account.
How Long Must One Practice On Demo Before Real Account
There is no straight answer to that question. I suggest that as soon as you understand how the buying and selling works and the strategy that you’ll be using. Of course, there’s a lot more that goes into trading successfully than just a strategy. You’ll have to acquire a good money management skill as well. All of the above mentioned can be achieved using a demo account. You can practice on your demo account for 10 years, but your first day on real account will feel exactly like that first trade you placed on demo account 10 years ago. See, all that experience you got from demo trading will not matter at all. You will need a new set of skills and experience for your live account. I always advise my own mentees to spend some time on demo and get the real test as soon as possible. A trader needs 2 sets of experience, the one acquired from demo and the one from real account which is the one that you need the most. Trade on demo, but do not delay yourself by staying there for too long.
Opening A Real Account
I published a blog post some time ago about start up capital on real account. You can read it HERE. On the post, I mentioned how you can start small and add more funds as you get more experience. I also spoke about how trading a smaller account can be discouraging and frustrating as everything move slower. With the right kind of support/mentorship, you can start with an amount that can give you a better trading environment (less stressful). Whatever amount you decide to start with, be ready to learn all over again. The live account seems to be different from demo account because of the emotional attachment we tend to have when real money is involved. How we handle and respond to pressures that come with trading on demo account is totally different from how we deal with them on real account.
Use demo account to learn, but don’t delay yourself by trading it for years and years. There are other issues that may arise with real account that you did not really bother to pay attention to while you were on demo. Slippages, re quotes and sometimes just the slowness of your internet connection. We tend to ignore these on demo platforms and only realize them on live account because our money is involved and we become extra careful. Being careless while on demo is the order of the day, we can leave trades running unattended without fearing or thinking about the losses or swaps. One can blow a demo account and request more virtual money from the broker.
Do you think you are ready for your live account? Do talk to me for recommendations or you can check these FSB regulated brokers and sign up with one of them (for the safety of your funds, always trade with regulated brokers) I have personally worked with the recommended brokers and they can be trusted with your funds. For private lessons & mentorship, check out this page for more information. Thank you for stopping by. Kindly share this post should you find it valuable.