Posted In: All About Money
Live Trading Vs Demo Trading: Learn Mental Differences
As a newbie trader, you are always encouraged to practice demo trading before live trading. By demo trading, you can master of original trading skills, create a trading plan, manage risk management and understand trading psychology (at least we hope!), Without paying your hard work on the trading line at the beginning.
Suppose once you are in a consistent profitable position and have been able to build confidence in participating in live trade, you decided that you could open your live trading account. Since you have already won a series of trading in a demo account, Is it very difficult to risk huge profits with the same amount of money at real risk? Should not be?
When most newbie traders come to live accounts from the demo, they generally believe that their demo trading results can easily be copied to a real account. Because of that, some become very frustrated when they realize that it is not always at all places. There are a few reasons:
1. Real money means real passion
As a trader, we try not to be emotional while accepting trading decisions. However, one’s feelings are never completely controlled and it can not be helped when the real risk increases the risk of income from risk.
For example, when you first established your live trade, how did you feel when compared to what you felt when you first trade on a demo account.
What did your vibrations get faster? Did your hands tremble a little? If so, then you’ve become crazy with pleasure or you got a lot of anxiety while you started a live trade! You can take advantage of signal service from FT4U, like the best forex trading signal provider.
2. There is no real financial risk to the demo account
Even if you try to consider your Demo account as a real one, there is no real financial risk in a demo. You can suffer a few losses here but, behind your mind, you know that your demo account can be paid by fake cash at any time.
If you make a lot of mistakes on a demo account, then you can easily get a new start and it puts you under a lot of pressure. On the contrary, you can hit your trading confidence in real money trading, and later your trading decisions may be foggy. If you are doing a price action forex trading course you will not have to go through this fog.
3. The temptation of trading sin is strong in live trading
Since you are dealing with real financial risk, you will start investing more emotionally to improve the results of your trade. As a result, a temptation to go back to your bad trading habits will be very strong.
When you think that you have finally passed these practices, you can find out the common trading sins such as your trade transaction, such as moving your stop losses, cutting your winning trades, and revenge trading.
For some tradesmen, their desire to prove that their live accounts can be as profitable as their demo accounts and their trading plans completely disregard and disavow new problems.
So how can you deal with this difference?
A good way to bridge the demo and live trading to apply live trading in a similar way to mental situations that you practice such emotive trade on a demo account.
You can do this by concentrating on the trading process without paying attention to profit. Take a trade at a time and make a firm position on your plan and focus on the implementation of proper risk management. Ensure that you can afford to lose up to the amount of money. It can freeze a bit and you can increase your focus on your trade.
Another good way to repeat your demo trading success is to keep a good trading practice, like writing in a trading journal.
Write what’s happening on your live trades. How do they differ from your usual demo trade? Do your responses and trading decisions differ when you are trading with real money? What else can you do better than this?
If the mistakes that you made on a live account that you don’t usually make on a demo, you will get an idea of the problem that you need to emphasize while doing your work.
Live trading from the demo is difficult to operate and often the early trading leads to losses, but it does not prevent you from coming back. You just manage the trade lightly and make sure that you are aware and fully prepared for the emotional commitment required for live trading.
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