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Is demo trading enough before real account?

lucie_fxtrader
Jan 07 2016 at 10:55
14 posts
LorraineP posted:
I would not recommend you open an account with real money until you can double the money in your demo account.
If your strategy is not good enough to do that, then what is the point in putting in real money?

Hi Lorraine,

Thank you for your reply. I thought of continuing practicing in the demo but opening a small real account to get the feel of the market and see the differences. maybe practicing strategies on demo before applying on real.
lucie_fxtrader
Jan 07 2016 at 11:50
14 posts
Wow guys thanks for the replies and help, glad to hear all your opinions really helpful!
mlawson71
Jan 08 2016 at 18:21
1487 posts
lucie_fxtrader posted:
LorraineP posted:
I would not recommend you open an account with real money until you can double the money in your demo account.
If your strategy is not good enough to do that, then what is the point in putting in real money?

Hi Lorraine,

Thank you for your reply. I thought of continuing practicing in the demo but opening a small real account to get the feel of the market and see the differences. maybe practicing strategies on demo before applying on real.

That is a good idea, but after you've spent at least a few months practising on a demo account. Up until that moment you'll be learning the software and the basics of the theory behind Forex trading. You may not actually be able to fully understand and analyze the differences between a demo and a real account until you've built that foundation of knowledge. Once you've done that, comparing the demo account to a small live account is a very good idea.
royaltrades
Jan 08 2016 at 18:26
1 posts
Most traders deposit real money and blow through hundreds and even thousands eventually. I agree to practice first. And if you just can't help yourself. check out tradersway. you can deposit as little as $10.00 USD.Keep your lots tiny, like .01. Hope this helps
Professional4X
Jan 09 2016 at 18:43
1189 posts
Strategy development is generally done on a forward trading demo account.

Once you believe you have a strategy that works and are comfortable with the results, then I would suggest opening a real account.

When you open the real account, do so with the understanding that the money you deposit, is probably going to be lost because you are moving from a demo to a live account and there may be problems you didn't foresee happening.

New people have a tendency to dump thousands of dollars into an account when they were first starting to trade, and then get extremely upset when they find out they just lost it all on a couple of very bad trades.

Trade only with funds, that are truly disposable, and won't have any negative impact on you.

Never trade with money that you can't afford to lose.
If it looks too good to be true, it's probably a scam! Let the buyer beware.
kricka
Jan 09 2016 at 21:57
92 posts
royaltrades,
the problem with an extremely small account is that one can not have good risk management. Taking too high of risk in percentage of the account when placing a position is the outcome even with the minimum of 0.01 lots and a narrow stop loss. The best is if a new trader would only risk max 1% of the account on a single position with a decent stop loss of let's say (20 pips). By having a funded account too small the risk can go way up beyond 1% and that just will put unnecessary pressure on the new trader.
" Lock in the profit and minimize the draw down "
kieran (snapdragon1970)
Jan 10 2016 at 01:02
1948 posts
If your going to trade with a stop loss of 20 points ,first your reward is 20+points away at least before you break even,second if your crap at entry points ,moving your stop this much you will get hammered,If your trade has moved more than 5 points against you,take it as a clear sign you entered at the wrong time.a small account with tight stop losses will make you very aware of capital protection.I have heard to many stories about large stop losses that escaped a few times then its wipe out,the market will catch you playing silly games.
"They mistook leverage with genius".
kricka
Jan 10 2016 at 01:18
92 posts
kieran,
20 points stop loss is not small, I would say it is a good stop loss for new traders entering the market. The pressure of a fast moving market as you know 20 pips is just a minor movement. It will give them time to adjust to the movement of the currency pair and when they are ready they can lower the stop loss. Better to have a decent funded account so they can feel comfortable with the pace of the currency pair by choosing a stop loss around 20 pips and a total risk of the account around 0.50-1% on a position.
" Lock in the profit and minimize the draw down "
kieran (snapdragon1970)
Jan 10 2016 at 01:22
1948 posts
If you need to use 20 points of a stop loss you shouldn't be trading a live account.
"They mistook leverage with genius".
kricka
Jan 10 2016 at 01:28
92 posts
It does not actually matter if the stop loss is 10 or 20 pips as long as the risk per position for a new trader does not go over 1% total of the account. Up to the trader to decide according to the account funded if he can have a narrow stop loss or a wider one.
" Lock in the profit and minimize the draw down "
kieran (snapdragon1970)
Jan 10 2016 at 01:46
1948 posts
That's fine if they have a large account,maybe their life savings in some cases ,this leads to a false sense of security,so they use large stop loss,what happens then is when they lose ,they increase the stop or leverage hoping to regain their losses ,until they see their account down to the last 10%.Then they say why didn't I start with a small account.... blogs are full of the same story unfortunately.
"They mistook leverage with genius".
kricka
Jan 10 2016 at 02:19
92 posts
I am an advocate of keeping the risk very small regardless of the stop loss used. It all depends of the funded account. That will determine the stop loss used according to proper risk management. If the account is funded with let say $400 the trader can place a trade of 0.01 lots with around 15 pips stop loss and still only risk 0.50% of the account in case the stop loss is triggered. $500 might bring up the stop loss to 20 pips and still only risking the same percentage of the account.
" Lock in the profit and minimize the draw down "
Check Mate
CheckMate3
Jan 14 2016 at 09:35
24 posts
lucie_fxtrader posted:
Hi all,

As a new trader I am trying to develop strategies in demo accounts before registering for real accounts. Is this enough though for me to be ready to enter the real markets?

Thank you!
Demo's are worthless. Look at daily charts and forget those that mention a 20 pip stop loss. Longer time frames are easier to trade than short time frames. I look at daily and 4 hour and occasionally 1 hour. When price moves in the same direction on both time frames, you have found a trend that can be traded successfully.
Professional4X
Jan 16 2016 at 17:36
1189 posts
Antonis94 posted:
Hello everyone,i have been trading in a demo account for a couple of days and im thinking of opening a live account,anyone able to suggest anything that would boost up my confidence or help me in general regards trading?


My suggestion is to keep practicing. It takes a lot longer than just a couple of days on demo to be a successful trader.
If it looks too good to be true, it's probably a scam! Let the buyer beware.
Professional4X
Jan 16 2016 at 17:36
1189 posts
For people who are saying 'demos are worthless'.... This is not true at all.

While there is clearly no financial worth to a demo account (can't spend imaginary dollars....), there is however a great deal of worth from the experience that a person can gain from the demo account.

When learning to trade and working toward fully understand the chosen platform, demo accounts are very important.

Demo accounts are intended for practice, learning, testing, and development of skills.

Practice on demo for 6 months, until you have managed to double your virtual investment a few times.

For example, start with a $1000.00 USD demo account, and trade this account IDENTICAL to how you would trade a live account. Once you have managed to generate a sizable 'income' from it, then switch to a live account.

But be prepared for the fact that live and demo can often have substantial differences in your trading results.

Only trade with funds that you truly do not care if you lose.
If it looks too good to be true, it's probably a scam! Let the buyer beware.
Check Mate
CheckMate3
Jan 17 2016 at 07:25
24 posts
Professional4X posted:



But be prepared for the fact that live and demo can often have substantial differences in your trading results.
 
I rest my case. Demo's are worthless except to learn how the platform works. I'm in the USA and most brokers demo's expire after 30 days. They are not intended for 'practice' trading for 6 months or longer while you try to double the account.
dianajs
Jan 17 2016 at 09:53
823 posts
The difference in result between a demo and a live account usually stems from the psychological effect trading with a live account has on a person, not from some technical differences between the accounts. Or at least, that should be the case if the broker's not making changes between the two. Demo accounts can be useful for more than just learning on them. Imagine you have a brand new strategy you'd like to test. Are you going to risk real money just to see whether it works on or not? Yes, you have to test it on a live account eventually too, but if you don't have some kind of positive preliminary results, what's the point?
lucie_fxtrader
Jan 18 2016 at 09:30
14 posts
dianajs posted:
The difference in result between a demo and a live account usually stems from the psychological effect trading with a live account has on a person, not from some technical differences between the accounts. Or at least, that should be the case if the broker's not making changes between the two. Demo accounts can be useful for more than just learning on them. Imagine you have a brand new strategy you'd like to test. Are you going to risk real money just to see whether it works on or not? Yes, you have to test it on a live account eventually too, but if you don't have some kind of positive preliminary results, what's the point?

So I suppose you suggest keeping the demo even after opening a live for safety reasons yes?
Patrik (FradeauX)
Jan 19 2016 at 07:59
14 posts
In reality, demo and live turn out to be noticeably different. Speed of order processing seems to be the largest difference, but it can be determinative aspect especially for short termers
Professional4X
Jan 19 2016 at 11:03
1189 posts
CheckMate3 posted:
Professional4X posted:



But be prepared for the fact that live and demo can often have substantial differences in your trading results.
 
I rest my case. Demo's are worthless except to learn how the platform works. I'm in the USA and most brokers demo's expire after 30 days. They are not intended for 'practice' trading for 6 months or longer while you try to double the account.

Depending on the brokerage, there may be a delay in market feeds, execution of order speeds, as well as the often substantial psychological differences.

Also, demo accounts do not just expire after 30 days. I have demo accounts that I use for 'practice' and 'strategy testing' on a regular basis. Some of those demo accounts are most certainly over a year old. It varies from broker to broker.

Practice for as long as you need.
Don't let anyone tell you that it is not ok to keep practicing.

Only once you are very comfortable with your skill level on demo, should you then consider going to a live account.

Perhaps move from a demo account to a cent or micro account. Trade it for a while, then once you've done well with that account (500% growth for example), then you could consider moving into a larger account. Of course if you do well enough with a micro account, you should be able to fund a larger account in no time.


Consider any funds put into a trading account to be completely disposable, because the probability of losing it all, is very very very high for new traders. Never trade with funds you cannot afford to lose.

If it looks too good to be true, it's probably a scam! Let the buyer beware.
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