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DEMO ACCOUNT vs LIVE ACCOUNT

olivia_jones
Oct 07 2016 at 08:11
24 posts
xgavinc posted:
olivia_jones posted:
Hello,

Well I feel that the difference is just in our heads. As a newbie trader, I have always liked the concept of demo trading before going live. Most of the brokers offer same quotes, spreads and trading conditions on both demo and live accounts. At least demo trading allows you to sharpen your trading skills, test your strategies and learns from the virtual losses. Go live once you have started earning profits consecutively in demo trading. As a new trader, all you are looking to do is learn to trade profitably and the bigger prize will follow.

Sort of... I'm sure you will agree that a $100 000 standard demo account is pointless (unless you plan on opening a $100k live account).

I prefer to 'practice' new methods / ideas / strategies on eg. a $30, low leverage (less or equal to 1:100) real micro, market execution account as opposed to a demo. The lessons learned are more accurate (more effort to learn about mistakes when using real money than just saying, 'eh, ok, open new demo') and losing $30 won't break the bank.

Not many brokers provide flexible options on demo accounts (maybe just an option for micro and standard, the rest, like start amount, execution type, etc. are written in stone).

$100k demo to test EA functionality (Is it opening trades, closing trades, using indicators or price action correctly, etc.)... fine!, 100%, no problem... else... no.


i agree that your point is also valid but sometimes, it becomes difficult to test your strategies with small account in live account because sometimes strategy itself can open multiple positions depending uopn volatility in the market. one does not need to have 100$ demo account, you can have a demo account with the customized amount which you want to have in live account and test your strategy accordingly
vontogr (togr)
Oct 07 2016 at 08:22
4862 posts
As I said if you trade via EA on good broker the difference is minimal as you avoid psychological aspect of risking real money.
Forex Protect
ForexProtect
Oct 09 2016 at 06:37
183 posts
On the demo you do not have emotions, but personally I recommend real, it reaches certain behaviors.
Rafael (Pumentio)
Oct 11 2016 at 18:43
12 posts
The thing is, however, that many of traders especially new ones don't take to consideration emotional influence of trading live account when ask about difference of that with demo. Let's say, difference as starting driving real care and simulated one. Demo is for getting enough to physics, and demo is for psychics. So First goes demo account, then cent account, and then live usual acct. He who climbs the highest hill straight away has the biggest fall
cyborgtrader
Oct 14 2016 at 06:29
2 posts
The best thing you could do to be a good trader is to manage your accounts in real.

regards
mlawson71
Oct 14 2016 at 11:40
1487 posts
One does have to learn somewhere how to do this safely first though.
montreal
Oct 18 2016 at 10:59
12 posts
In demo account price feeds may not be accurate or may be lagging whereas in live accounts price feeds are streaming and are as accurate and close to the real market.
The major difference between demo and live account is trades are not actually executed in real market in case of demo account . While trading in demo you can trade with cool hand as your real money is not at stake, so the trader is quite liberal towards risk-reward rules.
But the cost of decision at real account is measured in your own real money and when your real money is at stake it makes a huge difference. As trades in live account are executed in real market conditions.
Carlos (CarlosMZ)
Oct 21 2016 at 13:20
55 posts
sareen posted:
There's a conundrum that surrounds the financial markets being that if you participate, the market players will always catch you out. In the Forex market this is also the case IF you do not know enough about how it all works and how the big fish make the bucks. However, I am not a big fan of demo accounts because the fear of losing money is removed and therefore you cannot train yourself to let go of that fear. I would usually backtest an EA or strategy first, demo trade for a maximum of two months and then put it to the real market with tiny risk (starting off with micro lots). I think participation in the market is essential to your learning process. Demo accounts are better than doing nothing but the transition from demo to live is too large.

fully agree. it's like in sports - you can do magics in the training ground but once you go live on the pitch, you may not be able to succeed because the stress.
Carlos (CarlosMZ)
Oct 21 2016 at 13:20
55 posts
maybe we should not oppose demo against live. why not having both - one to test new systems, other to implement in reality? no to forget that on demos there is no slippage. this can affect profits quite much.
Meltafoz
Nov 10 2016 at 08:41
15 posts
CarlosMZ posted:
maybe we should not oppose demo against live. why not having both - one to test new systems, other to implement in reality? no to forget that on demos there is no slippage. this can affect profits quite much.

I guess the question of this thread mainly relates not to opposition of live and demo, but to difference of dealing with both of them and outcomes of such difference. What you say is the truth, but it is also useful for new traders to get a better edge of what is demo for and what is live for ;-)
Carlos (CarlosMZ)
Nov 10 2016 at 15:51
55 posts
Meltafoz posted:
CarlosMZ posted:
maybe we should not oppose demo against live. why not having both - one to test new systems, other to implement in reality? no to forget that on demos there is no slippage. this can affect profits quite much.

I guess the question of this thread mainly relates not to opposition of live and demo, but to difference of dealing with both of them and outcomes of such difference. What you say is the truth, but it is also useful for new traders to get a better edge of what is demo for and what is live for ;-)

what you say also makes sense, I just understood it differently from the title - demo vs live 😄
Nina (NEEnah)
Nov 13 2016 at 07:54
71 posts
I was afraid to put real money in the first 6 months and was trying to get it on demo accounts with different brokers. I vote with both hands for demo testing of anything before going live.
mlawson71
Nov 13 2016 at 11:04
1487 posts
I was anxious about trading with real money for quite a bit longer than six months. I did not have the skill, experience and confidence to do so.
Alexandre (AlGauthier)
Nov 15 2016 at 07:11
35 posts
Demo is helpful to get a good grip of all the techniques in trading as well as experiment with indicators and the signals they can give. Also the effect of lot size, leverage, spread and commissions are quite well demonstrated. If someone is starting from zero, demo is the important addition to reading guidebooks how to trade. Dealing with the psychology of things is more advanced and only live account can help here.
VickyJones
Nov 15 2016 at 16:03
45 posts
Demo stage in serious trading is a must. No way around it if someone wants to be successful.
mlawson71
Nov 16 2016 at 10:03
1487 posts
Demo trading is a must always, but I would say that if one is truly serious about becoming a trader live account training is also a must. Even if it's just a cent account, one has to learn to deal with the pressure of trading with real money.
xgavinc
Nov 16 2016 at 10:26
235 posts
mlawson71 posted:
Demo trading is a must always, but I would say that if one is truly serious about becoming a trader live account training is also a must. Even if it's just a cent account, one has to learn to deal with the pressure of trading with real money.

Totally agree. Too much demo trading gives a false sense of confidence and security, when you put your own money down (even just a few bucks) you enter into reality and leave the perception behind. Demo is there to learn the platform, learn to code and test EA's, test strategies, get a feel for indicators, get a feel for market reaction, sentiment, events, news and charts... it's not there to teach you success and failure in trading because it doesn't affect you either way.

I compare it to driving a vehicle on a dirt / farm road (demo) vs. driving in traffic on tarmac (real)... you learn about driving in both circumstances, but you don't know stress till you hit traffic for the first time.
For every loss there should be at least an equal and opposite profit.
Mario (leopoldo)
Nov 17 2016 at 15:53
41 posts
xgavinc posted:
I compare it to driving a vehicle on a dirt / farm road (demo) vs. driving in traffic on tarmac (real)... you learn about driving in both circumstances, but you don't know stress till you hit traffic for the first time.

Good comparison! I would even say that driving without traffic (demo) is not a real driving, it's just a skill to make the car moving 😉 However, real trading sometimes can be quite bumpy as well 😄 Demo is the initial condition before the live account. It also helps when testing different brokers in terms of spreads and platform stability.
Madjarrah
Nov 18 2016 at 09:10
13 posts
leopoldo posted:
xgavinc posted:
I compare it to driving a vehicle on a dirt / farm road (demo) vs. driving in traffic on tarmac (real)... you learn about driving in both circumstances, but you don't know stress till you hit traffic for the first time.

Good comparison! I would even say that driving without traffic (demo) is not a real driving, it's just a skill to make the car moving 😉 However, real trading sometimes can be quite bumpy as well 😄 Demo is the initial condition before the live account. It also helps when testing different brokers in terms of spreads and platform stability.

I always believed that such thing as platform stability is more about broker services and not type of account? Or what exactly do you mean under stability definition?
mlawson71
Nov 18 2016 at 10:33
1487 posts
xgavinc posted:
mlawson71 posted:
Demo trading is a must always, but I would say that if one is truly serious about becoming a trader live account training is also a must. Even if it's just a cent account, one has to learn to deal with the pressure of trading with real money.

Totally agree. Too much demo trading gives a false sense of confidence and security, when you put your own money down (even just a few bucks) you enter into reality and leave the perception behind. Demo is there to learn the platform, learn to code and test EA's, test strategies, get a feel for indicators, get a feel for market reaction, sentiment, events, news and charts... it's not there to teach you success and failure in trading because it doesn't affect you either way.

I compare it to driving a vehicle on a dirt / farm road (demo) vs. driving in traffic on tarmac (real)... you learn about driving in both circumstances, but you don't know stress till you hit traffic for the first time.

That really is a good comparison. Just like a newbie driver a newbie trader needs a safe environment to learn the basics so they wouldn't make a fatal mistake.
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