What are the differences between a Forex live account and a demo account?


Sep 29, 2021
As a novice trader just entering the Forex market, it is always best to start with a demo account, through which you can hone your basic trading skills, develop a trading plan, manage your risk appropriately, and more or more without investing real money. Learn less about trading psychology.

Once you have proven that you can make steady profits and build trading confidence, it is suitable to open a real Forex trading account. Once you have consecutive wins on the demo account, can you make the same profit on the live account? Is it that easy?

Of course not, when most novice traders transition from a demo account to start live trading, they usually assume that their demo trading performance also applies to a live trading account. However, life is never a dream. When a novice trader realizes that even if the simulated trading profit is 1, 10, or 100 times, he will still lose a lot of money once he starts a real market. The following is the difference between a simulated account and a real account, which is also simulated trading. The factors that profit may not necessarily carry over to the real market.

1. Real money means real feelings

As traders, we should always try to remain as calm as possible when making trading decisions. However, it is impossible for a person to completely drag emotions to the interference of trading. Novice traders are more likely to be dominated by emotions and make wrong entry and exit decisions.

For example, compare how you feel when you first trade on a demo account with how you feel when you place an order on a live account for the first time. Do you feel any difference?

Is your heart beating faster? Are your hands shaking? That's what it's like to trade on a live account!

2. The demo account has no risk, but the real account has risks!

Even if you try to treat the demo account as a real trading account, in fact no matter how serious you are, trading on a demo account is risk-free. Because the demo account loses money or closes out, you can open another new demo account at your fingertips to continue trading.

This can be both beneficial and harmful if you make a lot of mistakes and lose a lot on a demo account. The benefit is that you have the freedom to make mistakes and learn from experience so you can improve your skills. The downside is that it can put a lot of pressure on someone trying to improve their trading situation.

3. You can easily make more mistakes on a live account

Trading a live account is a huge risk as the emotional element of sweat and tears will have more of an impact on your trades. As a result, you are more likely to make more mistakes.

One of the most common things in live trading is revenge trading and overtrading.

When novice traders keep losing money and want to get back their capital, retaliatory trades will occur. Usually, investors will carry the losing orders and increase their positions against the trend.

Similar to revenge trading, overtrading occurs in the case of losses as well as streaks of winning. Once ecstatic and overconfident, traders may trade more orders to earn more, doubling, doubling, or even 10 times the previous volume

An easy way to fix this error is that Forex traders should have a clear trading plan and get into the habit of always following that plan, which helps to avoid "overtrading" and "retaliation trading".

The second solution is that novice traders need to readjust their mindset to the market: focus on the trading process rather than profits. Spend time managing risk, managing money, sticking to trading systems instead of finding the holy grail.

The transition from demo to live is very difficult because traders will really realize that losing money feels like nothing like a demo and all you need to do to overcome this challenge is to control your emotions.

Source: FX cashback http://www.fxcashbackking.com