Successful Trading on Demo Account vs Live Account

Hi,

I have been trading a simple scalping automated system using Metatrader with awesome results on my demo account, and wanted to know if what difference I might expect when I move to a live account.

The system is fairly simple, choosing either a sell or a buy, then taking one pip profit. If the market moves in the opposite direction, then another position is added (basically doubling down). After the third doubling down, the lot size doubles, then doubles again. All the while the profit point is moved down to make a one pip profit per trade. So even though several of the trades may be negative, the end result is a one pip profit per trade.

It seems to work with an average of about 1-2 doubling down before hitting its target.

My demo account of $50,000 has made about $300-$500/day, with a maximum drawdown of about 6% in a month, trading 0.3 size lots.

Back-testing shows consistent profit week after week, with only one major drawdown in 6 years.

What factors would cause a live account to trade differently than the demo account?


Thanks for any comments!

livenow posted:

What factors would cause a live account to trade differently than the demo account?

1. Spread


99% certain that this system would not profit in long-term on real account.

Doesn't my demo account take spread into account? The price between bid and offer shows up, and my trades are executed accordingly. I'm currently testing AUD/USD, and the spread is usually between 2.0 to 4.0, usually around 2.8. Is this not what I should expect when I'm trading a real account?

Just curious. The more info I have the better. Thanks for the post, and I look forward to clarification.


Happy Labor Day!

Maybe so, but I have taken trades where I thought the spread would be covered but after trade execution completed that was not the case. The thing is, taking only 1 pip profit is not really enough breathing space and I have yet to see a martingale that survives the long-term. Have you tried taking 2 pips, or perhaps 5?

I might be somewhat biased, as even my worst winning trades usually bag 50 pips or more.

Well, I'm going to be testing it for a while longer. The EA generates about 150 trades per 24 hours, so 150 pips per day. I can live with that.

But like you said, it will be a different story once I'm using real money.

Thank you very much for your input. I appreciate it.

livenow posted:
    Well, I'm going to be testing it for a while longer. The EA generates about 150 trades per 24 hours, so 150 pips per day. I can live with that.

But like you said, it will be a different story once I'm using real money.

Thank you very much for your input. I appreciate it.

are you backtesting with %90 modelling quality. if yes first you should backtest it with %99 modelling quality. Mt4 'each tick' BT is not each tick.it is using fractal interpolation instead. and this unfortunatelly is extremly effective on TP<15 pip. in your situation it is %100 effective.

real account effects
- if you trading with DD broker then in real account be ready to face with requotes
- if you trading with STP or STP/ECN broker then in real account be ready to face with negative slippage.
- order execution is slower in real account regarding to demo account. BT there is no delays!!
- floating spread / if your broker is floating
- news
- connection failures
- login failures.

regards
walker

As I can see from your stats, your avg. gain is 2.8 pips. I'm pretty sure, this is unrealistic for profitable live trading.
You often will not get prices as good as on demo and your strategy will not be profitable.
Try a strategy with at least 5 or 7 pips.

Thanks everyone for the input. I'll take all this into consideration before live trading. You've been very helpful.



J

On a real account, a trader will most likely try to close the deal in profit or at breakeven. Many traders make money when demo trading but lose money when they convert to a live account. No Real Consequences — Demo accounts allow you to trade without risk.

Of course, traders must prefer live trading, because there is no need to stay on demo for so long. Successful trading on demo means actually nothing. If we compare trading activity with sports activities, then we can state that demo account here is just a training/preparation for competitions, while competitions are similar to trading on live account. Now ask yourself a question, do you get something from preparations besides experience and skills? I guess no. Thus, demo trading is good but traders shouldn't consider it as something where they can become successful. It's a nominal success I think.

I think something people underestimate when moving from a demo account to a live account is their emotional state. It becomes more stressful when trading with your actual money. Also, people can put far too much pressure on themselves to be making money straight off. The best way to discipline yourself is to treat the demo account as if it's your own money. Sounds like your methods seems to be working on the demo so start small on a live account before looking to make big profits.

Demo performance is always better than live. But both are important for learning.

@SofieAndreasen Yes demo performance is always better than real. It's because we don't feel any psychological barrier in demo. And in live trading, emotions play a huge role.

When one joins this business, they know little and are just getting started, and once they sign up for the demo account, they can gain valuable experience and knowledge. Therefore, do not waste time on the demo account for less than 6 months for getting a good experience.

I think to be a successful trader need both to learn.

Demo performance is an all-time better compared to real account due to trading psychology.

I guess there is nothing interesting in successful demo trading. No doubts, that demo trading has plenty of impact on your total trading activity and it literally meets you with trading. Successful demo trading is considered to be something that will not bring you money. It will bring you the understanding that your strategy works perfectly and on this stage you have to move on real account in order to start apply your strategy for earning money.
I believe that it's better to stay on real/live account in order to gain experience. Even if you will lose money, it's okay actually, all traders make mistakes and you shouldn't be afraid of them.

Successful trading is depend on most powerful analyzing trade knowledge , on the other hand , despite of good trading knowledge that’s not possible at all to lead a successful trading life at all if you don’t have a reliable support from a credible trading broker , because the broker can affects the result of our trading with certainly.

I heard that a successful demo trader will face serious difficulties once he moves to a real account. I still trade on a demo account and but I already realize that it all greatly differs. I also lose on my demo account and when I try to imagine that these were real losses it makes me think a lot. For example, it makes me work harder on the creation of a more effective trading approach.