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
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
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.
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.
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.
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 ;-)
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