Wednesday, December 26, 2012

Why is demo trading different from real



I have no doubt that those who have been long in business know the answer to the question. However, most newbies don’t and I just want to give a few thoughts of mine on the topic. I have traded both: demo and real account and had mixed results doing that. I still have a demo account for analysis purposes, but I do trade real money now. The results on these accounts are different for the following reasons.

Firstly, when you do not risk real money you do not have stress and this creates an illusion that trading is easy. 

Secondly, you usually risk much more on demo account than on real one and that type of risk is dangerous. It is simply too big!

Thirdly, you will not be trading demo account consistently as there is no real incentive to trade. It is just a game, which leads you nowhere financially. You need real money to make to get inspired. 

The amount on a demo account is usually much bigger than you would trade on a real account.
These are the main reasons why results on demo account differ from the results on a real one. 

Ok, sorry for too shallow post. Too lazy to expand on the topic during holiday season.

Good luck.