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Demo Accounts v Live Accounts

Discussion in 'Beginners Bootcamp' started by Peter Hurley, Nov 19, 2008.

  1. Peter Hurley

    Peter Hurley Recruit

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    Hello to everyone reading this!

    I've read a few times today that although testing demo accounts using a particular method may show it to be 'profitable', when one switches to a live account (using the same method) it may have the opposite effect.

    Would somebody be kind enough to explain why this happens, or any other differences between a demo MT4 Account and a Live MT4 Account.

    Thanks in advance.
     
  2. Begginer

    Begginer Recruit

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    May be I can give you an answer

    Theoretically is the same.

    I have used demo accounts and real accounts and the software is more friendly in demo accounts. with other brokers the software is the same.

    When your are using demo accounts you do not have the emotional pressure of losing your hard earned money.

    In a real account, if you measure your blood pressure will rise or you will have a headache when you go in the wrong direction of the trend.

    If you trade using only knowledge and not emotions you can earn the same as in a demo account. But this is the mos difficult thing to do, or at least for me.

    Greed and fear is what moves the market, greed an fear is what makes you earn or lose pips.

    That is one of the reasons they advise you to trade with money that you can afford to lose.

    In demo accounts the forex broker gives you the liberty to gain all the pips you can, but in a real account if you gain a lot of pips, the broker starts to lose his money, he avoid this by difficulting your trades (As other pip soldiers tell us).

    I hope my answers are helpful to you, this is what I have learned, but I may be wrong.
     
    #2 Begginer, Nov 19, 2008
    Last edited: Nov 19, 2008
  3. Pharaoh

    Pharaoh Colonel

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    Begginner is definitely correct. Psychological differences between demo and live can make a huge difference, and there is always the possibility that some brokers might deliberately manipulate entries and exits on demo accounts to increase profitability.


    Even un-manipulated demo accounts also are much less likely to have requotes and slippage, especially at times of high volatility.

    In general, it's a good idea to initially test a new EA or other trading method on demo. If it returns a decent profit on demo, then try it live trading VERY small amounts of cash.

    Success in demo means it might work on a live account.

    Failure in demo is a good indication it won't work on a live account.

    If you really want to fast track something, you can skip demo trading. To do this and not get wiped out, find a broker that offers nanolots (1 cent per pip), open a small account, and test live.
     
    #3 Pharaoh, Nov 20, 2008
    Last edited: Nov 20, 2008

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