Demo Trading Versus Real Trading: A Warning To New Forex Traders

It is amazing how often it happens

It is amazing how often it happens. A newbie trader has a spectacular run trading virtual cash on a broker's demo system. They then eagerly make a deposit and get to trading real money. Unfortunately, it doesn't go as well as they had hoped. Losses begin to occur and the trader starts to wonder what they've done differently.

Virtual money is nothing. You can always get your broker to add ten thousand more virtual bucks to your account. As such, you don't value it and you can trade freely without the fear of losing it. This is different from hard earned money. Most traders not only trade to win more money, but also takes steps to limit their losses. Since you aren't the government you can't simply print up another batch of real money. You value it and you're scared of losing it. As a newbie, you've just experienced your first trader psychology issue.

Another reason for this discrepancy is you're trading an actual moving market. This means sometimes prices change quicker than your broker's platform can update them. So you have a form of slippage. As a result, you probably won't be able to enter trades at your desired open price. Instead, you will get a bad fill and over time, this affects your trading. It is something that happens and there really isn't much you can do about it.

Forex trading is difficult. If you're doing great on the demo, then that is an accomplishment. But you shouldn't think that this success will transfer to the real money platform. Instead, take your time and make small trades. Then, you can adjust your strategy as needed and live to trade another day.

Demo Trading Versus Real Trading: A Warning To New Forex Traders

By: Alex Post

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