There is no comparison between demo trading and live trading. They may look the same on the surface level but they are not the same. Our mindset is different when we are risking real money. We struggle to control our emotions and end up losing the trades. But that’s how we learn as beginners in forex. So, we just need to focus more on emotional control and risk management to minimise the losses during the learning period.
Piffling posted: There is no comparison between demo trading and live trading. They may look the same on the surface level but they are not the same. Our mindset is different when we are risking real money. We struggle to control our emotions and end up losing the trades. But that’s how we learn as beginners in forex. So, we just need to focus more on emotional control and risk management to minimise the losses during the learning period.
I completely agree with you on this as, demo trading is just to make you learn about the various strategies to trade in forex but going live is totally different.
This is because there is no trading psychology involved in the demo account and we don't know how to control our emotions there, whereas trading on a live account requires good emotional stability and risk management strategy, which many traders overlook when trading.
A demo account is manipulated by the broker, which fills you with unnecessary confidence. I don’t believe in spending more than a month on a demo account and moving to trading on a micro account as soon as you have obtained the basic knowledge.
Demo accounts are meant for practice purposes and not for actual trading experience. Once you have obtained the basic idea of trading, move to live trading with a small account because that’s where you will know the real meaning of trading.
Demo account is only for educational purposes and does not guarantee success on the live platform. Demo lacks in developing trading psychology which is the main reason why traders make money on the demo but are unable to make money on the live accounts.
Demo trading is a simulation of live trading. However, demo trading is simpler because it is more adaptable. Traders become stressed and fearful of losing money while trading on live accounts. It increases the likelihood of being defeated in the market.
Demo trading is just a medium for practice and practical learning. You are not really trading when you are on a demo account. You may feel like you are making profits easily but that happens because you are freely doing anything you want with the virtual money. But we won’t be able to do that when it comes to live trading with real money. We will have to deal with a lot of mixed emotions as they will affect our trading decisions to some extent. It will take time for a beginner to get used to it and one must focus on learning until they develop their skills as a trader.
Oh in addition to all your thoughts, and it correct I agree with you. But in addition to your thoughts, I would put a separate emphasis on the psychological readiness of the trader to move to a new level. Cause in the head of every beginner, this is a very large-scale and difficult decision. Therefore, make up your mind gentlemen traders. Decide to trade.
The most reason is about psychological trading, working on a demo account usually start with big initial capital maybe $5000, this is free emotional pressure, although losing all capital is nothing hurt, but in real trading, traders start using lower capital and emotion pressure highly correlated into a trading habit, fear losing money will change trading plan, sometimes making mistake like, cut small profit because fear will drag into loss again later, or let floating big loss hold until margin call.
tyson_learner posted: One of the biggest reasons could be that some people can't perform well under pressure on live trading. That's why they fail to make money there.
People get overpowered by their emotions when doing live trades. The result of fear is reluctance to enter into a trade or premature closing of a winning trade. We should decide what’s best for us with practice and emotions should be managed while trading.
Even with the same strategy, a trader is more likely to make a profit in the demo account than in the live account . But why does this happen when both the live and real account give access to the same real-time forex market? The answer is very simple - psychology. When trading in a demo account, the trader has no fear of losing the money. This makes the trader take bold, confident decisions, and not trade with the fear of losing. The situation is completely different in a live account. The trader trades with his own money which makes him fear any probable loss, thereby taking timid decisions. This is the biggest reason for loss. After losing a trade, traders are most likely to make rash decisions and indulge in overtrading or revenge trading, thereby losing more.
Whatever the reason, it's important to remember that your demo trading results are not necessarily indicative of your real trading world results. Demo trading is a great way to practice and hone your skills, but don't get too discouraged if your real-world results don't match up.!
I believe it’s the psychology of trading. Losing on your demo account won't cost you anything because it's not real money. Real money is at stake when you use your live account and thus emotions begin to surface. Demo accounts provide a risk-free environment in which traders are not scared to take risks, whereas live accounts put traders under pressure and make them hesitant to risk their assets.
When you trade on a live account, the fear of losing money can dominate your mind, and when these emotions hit your brain. They are detrimental to your trading. Demo trading, on the other hand, allows traders to practise without fear or emotion as no real money is involved. This is the primary reason.
Psychology is the main reason. When you demo trade, you trade with fake money and don’t worry about losing it. But that’s not the case with live trading, where you are more emotionally invested, as you fear losing money, which also pushes you to make risk trading moves.
Demo is where your comfort resides and in live trading the real game kicks in that’s when one should use its capital wisely to gain returns rather than losing it out of greed, but if we talk about demo we gain more money in it because the real emotions do not kick in whereas in live trading our psychology changes and the trader either restricts itself to fully try out their skills or does over-trading out of greed.
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