Is trading demo account the same as live forex trading?
Let me ask you a different question.
When you buy a house in the board game Monopoly, do you get excited or stressed?
How does that emotion compare to when you buy an actual property?
Pretty different aren’t they!
I appreciate this is an extreme example, but the premise is the same. One transaction matters and will have an impact on your life. One won’t.
If you lose $100 in the market, that’s money you can’t spend on something else. As much as you tell yourself “I don’t care, it’s only $100” your brain behaves differently than if it was one of these:
If you ask this question to most traders, they’ll give you hogwash on liquidity and spreads, saying that trading in the real market is different because you’ll receive different trade execution.
This is absolutely true.
It’s not the reason you’re more likely to make money on a demo account. The real reason is you, and your brain’s reaction to live money trading in the market.
I believe demo accounts are a waste of time once you’ve learned how to use the platform. Sure, open demo account and learn how to place & close trades.
But once you’ve got the basics right, drop $100 in an account (beware, you’ll almost certainly lose this money), this experience trading live will give you a first taste of what it feels like forex trading for real.
No trader in history has achieved long-term success without understanding their own psychology around making and losing money.
New traders usually think they need to find a winning strategy as their first port of call.
Here’s what you need to do if you want to be a successful forex trader:
- Find a basic strategy (I have a few I share in our trading room).
- Trade a live account with a small amount of money.
- Do your best.
- Start again, learning from your past mistakes.
Be sure to keep a journal of your trades and understand how and why you make decisions.
Over time you’ll understand how important psychology is in trading. It’s the primary thing I credit to my continued success over the past 10 years as a professional trader.