3 Difference Between Forex Demo Vs Live Trading Account That You Must Know

Experts have always encouraged newbie traders to practice their forex trading using a demo account before going live. Forex Demo Vs Live Trading Account comparison essential for first-comers to hone their basic trading skills.

So today blues and bullets team discussed these include developing trading plans, managing their risk exposures, and, most importantly, understanding the trading psychology.  Once you show that you’re consistently profitable and confident, it’s time to get your feet wet and open a real trading account anyhow you may check the compare the best Forex brokers in the USA.

But before that know this just because you demonstrated consecutive wins on demo doesn’t imply that you can manage risks and amass huge profits with actual money. The success you demonstrated using a demo account is challenging, to replicate. Here’s why:

1. Real money equals real emotions

Here’s the thing it is expected traders be emotionless as much as possible while making trading decisions. However, that’s isn’t possible entirely, and most can’t be when real money is at risk.

The point is the emotions you felt while trading on a demo account isn’t the same when you started trading on a real account. Your heart was beating faster and you had butterflies in your tummy, right? If so, it’s perfectly normal. We all feel extra nervous when trading lives.

2. You don’t have to worry about real monetary risks on demo

Many argue that they’ve treated their demo accounts as a real one, yeah, maybe, but let’s be honest here there is no monetary risk on demo. Sure, you see some losses here and there, but deep inside your mind, you know none of it matters because you never used any real money.

If you know your mistakes aren’t real losses, you don’t have to worry about losing your confidence, because you can try doing better in your next attempt. Unfortunately, that cannot be said while trading on a live account with real cash. Any mistakes or losses, and you’ll find yourself in a slump with your trading confidence hurt.

3. The tendency to make trading mistakes is higher in live trading accounts

In live trading, you’re using real money with real monetary risk.  Therefore, it’s likely that you’ll be more emotionally involved with the outcome of your trades. Subsequently, this will tempt many to revert to their bad trading habits.

You think you won’t commit these trading sins, but sooner or later, you’ll realize that you’re making changes to stop losses, doing revenge trading, and cutting loose your winning trades early. Some traders even go to extreme lengths to mimic the trading successes of their demo accounts, leading them to even more problems like overtrading, and ignoring their trading plans and methods.

How To Deal With These Differences?

It’s no brainer that you need to copy the emotionless state of mind you experienced in the demo trading if you want to bridge the gap between a demo and a live trading account. The right way to do this is to focus more on the processes and less on the profits. Stick to your trading plan, focus on only one trade at a time, and practice proper risk management.

Ensure that the making money you’re trading is within your tolerance, as this will reduce some of the stress and help you focus more on your trades. Another right way to copy your demo trading success is to develop good trading practices like maintaining trade journals, keeping track of your live trades, reactions, and trade decisions.

Analyze the mistakes you did on your demo trading account, so you don’t make the same mistakes on your live account. Remember, it is a challenge to make profits during live trading. However, being focused and aware and committed will make your transition to live trading easier. 

Your main focus should be trusting the procedures and rules you have put in place and developing the discipline to follow through.  Having a conservative approach to money management initially will help you to gain confidence.  Then you can build on this solid foundation and leverage later on.

Conclusion

In conclusion, forex demo accounts and live forex accounts are different.  Demo account help to familiarize you with the software and how to execute a trade.  Once you have gained some experience you can progress to a live forex account. 

Remember to remain in control of your emotions, from the start to the finish of a trade. Stick to your plan and that will ensure that you do not exit a trade too early or become too greedy and not close your trade at the appropriate time.

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