The Difference Between Demo & Live Trading

demo trading psychology

Before you start trading with real money, you can open a demo account to experience what trading Forex may be like.

 

Demo trading is not live trading so it will never fully show how to react but is useful to have one initially to learn how things work.

 

 

There are two common types of people who have demo trading accounts and trade.

 

Demo Trading - Type 1

 

The first type of demo trader, is the one who never takes the demo trading account seriously. The amounts of money given in demo trading accounts overwhelm them and they start becoming childish with their accounts. Placing crazy trades and not really caring about it because there is so much money in the demo account. 

 

This is the worst type and from the beginning, you should look to stay away from these kinds of actions. This basically limits your growth (if any) the trader gets because they do not spend time trading their plans or gaining wisdom from the demo trading account.

 

Demo Trading - Learn The Business

 

Instead of demo trading correctly, they are having fun in the business, before they have even made a name for themselves. It is clear and VintagEducation hopes you know what becomes of these traders. They end up with margin calls and are too damaged thereafter to even give Forex another chance.

 

Realistically they should give themselves another chance because it was not Forex. Due to the fact it is their playground, like most children left to themselves, they form bad habits and take them over into Forex live trading.

 

Demo Trading - Type 2

 

The second type of demo trading trader, is the trader who takes the demo account too seriously. They place themselves in a better place than the first category however there are drawbacks to this as well. Traders who are not successful in this group may leave the market all together. In some cases that is right, however in many cases it is wrong. No-one is going to hit the home run straight away and every day. Traders need to give themselves a growth period in the beginning.

 

Those who win in this point are easily carried away in their winnings and forget this is not real. Making a profit is a good sign in demo trading, however remember there is a real world out there.

 

There are certain emotions you have never felt before which will effect you in live trading, emotions you may never experience in demo trading. You will be trading your own investment now and not something which was given to you for free. How you will react is going to be different.

 

Demo trading is good and should be used to understand how the market works. You should also use them to understand how the trading platforms work. And learning how to begin reading charts. Most importantly demo trading should be used for trading your plan.

 

Learning to become consistently profitable in doing your plan day in day out. Demo accounts work on Forex psychology first and foremost, remember that.

 

Leave a comment below of the biggest difference you felt between demo trading and live trading.