Demo vs. Real Trading what is the difference ? What to Know Before Making the Switch ?

Demo vs Real Account Trading | Reality of Demo to the Real Account

New traders tend to start their trading journey with a demo account. It makes sense — using a demo account and is a practical way to learn the basics of trading. In fact, it is often recommended that traders should only switch when they have consistent results on a demo account with their strategy.

Once traders have consistently made winning trades with some strategy, they expect the same results on their real account without understanding the emotional behavior of traders when trading in real account.

Not only are these expectations unrealistic, but they will also set you up for failure. Before switching from demo to real trading, it is important to understand all the aspects that make real accounts different. Taking these points into consideration and planning before will better prepare you for the upcoming situations.

1 - Understanding the risks of trading

There is no real risk involved when trading a demo as there is no real money involved. Losing on a demo account is not discouraging because you can refill your account without spending a cent
Trading on a real account is a completely different story because of your emotions.  

Since you are investing your hard-earned money, losses are going to hit much harder and demotivation is on its way to hit you much harder. This will impact your trading confidence and your power of thinking and will lead you to take irrational decisions. Accept that losses are a part of trading and no one can run away from them.

"Don't hurry to recover when you find yourself in losses because this is where you will only take irrational decisions and will ultimately lose all your principle rather stay calm and think clearly".

2 - Understanding the psychology

The bottom line is that trading on a real account is an emotional rollercoaster, especially when switching from the demo for the first time. You will feel a rush of adrenaline a lot of excitement, and nervousness throughout your first trading session, feelings of frustration or anger may also be experienced.

The key here is to keep your emotions under control which sounds easy when heard and is the hardest when experienced. If the strategy you are using on your demo account isn’t working the same way on your real account, then in most cases the fault is your emotions and not the strategy. Forcefully attempting to replicate your demo account results on real will only push you to revenge trade which is actually a dead end.

"The market is an ocean and you my friend not even jellyfish".

3 - Market condition changes

Market conditions change in seconds. A number of novice traders may not be able to handle the volatility of the market when facing it for the first time, while others may find it difficult to trade in a slow or sideways-moving market. Overall for a novice trader, a sudden change in market condition is hard to digest and so if you are new in this trading world make sure you understand it properly

Before switching into real trading, make sure you have a plan for changing market conditions. One more thing to understand doesn't go for large positions, start off with smaller amounts. You can increase your positions after achieving consistent gains and with more experience under your belt.

"A new trader has money but zero experience in the beginning, later they have the experience but no money to invest in"
First work on your knowledge then only you will succeed, it's not only about trading but in all parts of life, experience and knowledge will help you cross the road and is the only way out.
 

Now that you know the difference between demo and live trading, are you ready to make the switch?

Keep learning, Keep Practicing, have a great day ahead, and stay connected to get more information related to trading,

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NOTE: This article is not investment advice. Any references to historical price movements or levels are informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future. Information regarding past performance is not a reliable indicator of future performance. Forecasts are not a reliable indicator of future performance. In accordance with European Securities and Markets Authority's (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.