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Compare Now | Demo Trading Vs. Live Trading

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  • Compare Now | Demo Trading Vs. Live Trading

    Hello, everyone. How's everything going?

    I do understand that we are going through an extremely DIFFICULT time due to the COVID-19 pandemic. Trust me, like every other global difficulty that we have faced before, we'll also surely go through this one as well. Therefore, have some leap of faith, alright!

    Now, moving on, as I was scrolling some questions on quora concerning several important aspects of Forex trading, I was literally shocked!

    You might be wondering the reason, right?
    • Is demo trading effective?
    • Is live trading a better choice?
    • What are the advantages and disadvantages of both live and demo trading?

    And many more!

    I mean seriously? Unless you are a complete beginner in the FX industry you should have enough knowledge regarding this aspect. Because they are HIGHLY significant when it comes to Forex online trading. Besides, a lot of people were asking "what is a better option between DEMO trading and LIVE trading?"

    In simple words, "Demo trading vs Live trading".

    Ok, I heard you. Demo trading vs Live trading? It's on! Oops! I forgot, Before starting the comparison between Demo trading and Live trading, how about clarifying the sectors which I'm gonna shed a light on?

    Well, here you go...
    • A brief introduction
    • Execution differences
    • Physiological effects
    • Benefits and Drawbacks

    So, let's dive right in, shall we?

    Forex Demo Trading Vs Forex Live Trading

    At present, we live in an era of innovative technologies and as a result, it is HUGELY affecting our way of life. And you can refer to online trading as a solid example. Moving on, while people express themselves about online trading, Forex is clearly on everyone's thoughts these days.

    And after that, the spotlight comes the demo trading accounts which can be noted as a highly particular portion of Forex trading. Demo trading provides the market traders with a tech-based realistic Forex trading experience. Though it was mainly designed for the newbies, a lot of experienced traders also use it to examine the effectiveness of their strategies.

    You know the score!

    Besides, it is probably the best place for newbies to get introduced to the trading platform and might as well understand them. On the other hand, the Forex live or real trading whatever you may call them is an entirely distinct experience. If you comprehend the demo trading accounts as a preview then my friend the real trading accounts are the "complete picture".

    In a live trading account,
    • You've to invest real money in order to start trading.
    • You've to test your strategies times and again otherwise you will end up losing money.
    • You'll have to get a hold of your emotions

    In the end, what I'm trying to say is you can't screw up anything in live trading or you'll lose everything "BIG TIME".

    Yes, you read that right, pal!

    Diversity In Execution

    Though demo trading accounts provide a realistic and relatable trading experience everything has its limits.

    Don't even try to deny it!

    As a result, it carries a handful of differences comparing live trading. And one of them is Re-Quotes and Slippage. The reason?

    Frankly speaking, demo trading accounts are not eligible for interbank markets. So, the chances of experiencing any sort of lags or Re-quotes are INSANELY faint. Usually, it happens to the real trading accounts because they are directly connected with the interbank markets and the main cause of this situation is the unstable movement of the market.

    The Diversity In Spreads

    The exchange rates which are available on real accounts often don't match with the ones accessible in demo accounts.

    I know what you're thinking!

    Forex demo trading accounts are designed especially so that they possess the same exchange rates which are offered on the live trading accounts. But why sometimes the exchange rates between two trading accounts differ?

    Well, the simple answer is " the ever-changing volatility of the Foreign exchange market". As we all know, sometimes due to numerous political or other situations the currency exchange rate faces insecurity. Sometimes it climbs higher or also sometimes it goes down the chart.

    So, what I'm trying to say is these sorts of events are not specified in demo trading accounts. They possess a fixed exchange rate which is calculated over the average possible situations.

    I hope you've understood!

    Psychological Effect

    Including several sorts of variable executions, there are also a few worrisome facts that Forex demo trading possesses compared to live to trade. Any bright ideas about what it might be?

    How about taking a wild guess! Well, it is the one and only " Psychological effect".

    Generally, almost every trader often feels greed or fear while trading in a real account because they have spent their money on it and if they make any sort of mistake then the chances of losing their entire capital are HUGE.

    So, they think about every step at least 10 times before actually committing it. On the other hand, when he uses demo trading accounts he doesn't get overwhelmed with his emotions.

    But wait, there’s more!

    As a result, he doesn't feel any sort of greed or fear before committing. Because he knows the money he is using on a demo trading account is not really rather virtual. And this leads a trader to do overtrade and also take unnecessary risks. Which later becomes a bad habit and leads him to the road of destruction. And that’s something you should DEFINITELY avoid.

    Benefits And Drawbacks

    Demo Trading:

    We all can agree on one thing and that is "demo trading really does have a lot of advantages". Some of them are listed below:
    • It helps a trader to recognize Forex trading by introducing market factors such as charts, patterns, indicators, etc.
    • Creates a risk-free environment for one to learn how to trade.
    • It encourages a trader to choose his desired trading style and platforms.
    • It is probably the best place to examine and create new trading strategies.

    Despite that, you can also expect some drawbacks from demo trading accounts. Such as,
    • It will demolish your trading psychology.
    • You won't have complete over your emotions as a result you'll end up overtrading and taking unnecessary risks.
    • You won't be completely grown as a trader.
    Live Trading:

    Live trading is the only factor that can turn you into a real trader. As it offers:
    • Chance to earn real money, unlike only the virtual money at demo trading.
    • It builds the quality in you and helps you to grow as a trader.
    • Live trading can demolish the habit of overtrading also it helps you to get a hold of your emotions.

    But again, it also causes some problems too. Such as,
    • Live trading contains all the real money which you invest, so if you do one wrong move, your capital is at risk.
    • Various political and global situations can cause a lot of differences in the exchange rates.

    There you go, it’s the theoretical comparison between demo trading and live trading. They outperformed each other at 9-10. Again, things don't have to go this way.

    You didn't quite get that, right?

    Well, to be frank, there are some things that you shouldn’t compare with each other as they both hold a difference as well as quite significant to it. Such as demo trading and live trading.

    Both of them have their own significance. If you can somehow make up your mind and use them both in your regular trading career then I think the outcome will be EPIC.

    Just imagine a few things-
    • You've lately joined the FX market and you're using the demo trading to get a realistic preview of the experience.
    • You're learning about the market indicators and major factors of the FX market with the help of demo trading.
    • Now, you've spent some time in the industry, you know how it works. Finally, go with live trading for building a career as a trader.
    • Again, you've created a strategy and you want to taste it (which you're unable to do at the live account). So, return to the demo trading platform to see the outcome using that particular strategy.

    Did you get it?

    That is the ABSOLUTE reason which I want to share with you all (especially who are new at Forex trading). I hope that from now on, you'll make only the right decisions.

    Good Luck, May you have a safe and profitable trading career!

  • #2
    Great article. I fully agree with it. Actually there are differences in trading on real and demo account. The most important is that on demo you just dont care if you lose money. Losing money on real account causes real pain, it hurts you emotionally


    • #3
      A lot depends on what kind of experience a trader has and what kind of preferences. But most traders combine work on a demo and a real account into a single complex in order to test interesting approaches and check the level of knowledge on the one hand, and on the other hand to get real income, which is the main goal in this business. I have heard different opinions about what exactly should be done and in what ratio. On the other hand, each of us has many individual wishes and goals, respectively, we should be more focused on what suits us and what brings the best result. But we shouldn't forget about the demo at all, especially since many companies now offer access to this tool for a long time.


      • #4
        Demo is an amazing tool that allows everyone to try their hand at trading without risking their money at least until you are sure that you are ready to try a real job. The only difficulty is that most brokerage companies offer not very high quality demo accounts, which are a limited set of indicators, assets and tools. Accordingly, you're not always sure that you're trying exactly what you're going to use in your future work. So, anyway, don't be too lazy to gather all the information about what you're so interested in, so you won't feel even a little disappointment later. Be careful at every stage.


        • #5
          As much as people try to say to The truth is that demo trading and live trading will never be the same. That is why most people are good at demo trading but when they are given a chance to go' for ie trading they mess up and make a lot of losses. At times they even lose it all. That is why in dom trading you need to think of the demo money as your actual money if you want o be successful in live training. Most people don't take demo trading seriously because they do not see it as they are losing something because it is not real money. They are therefore calm snabel to make decisions accordingly.


          • #6
            At anyone time will do trading ever compare with live trading no matter how the people code to view it. That is because of the fact that people do not take demo trading that seriously as live trading. If you compare a person doig demand a person doing live trading then you will realise that the person doing demo is clamor and is ael to make better decisions than the person who is in live trading. There is always a lto of tnestion in live trading because unlike demo trading you are actually sign yoru money There are actual risks unlike demo trading where yoa re not losing anything. That is why you always need to take the critical approach.


            • #7
              For beginners, I suggest trading using a demo account to gain forex knowledge and to understand its platform.

              Traders that have gained enough experience from the demo should move to Live trade for real account experience and understand risk management.


              • #8
                Demo trading is mostly used to practice live trades and build forex knowledge, it is mostly used by beginners, and experienced traders use it to try out their new strategy before using it on live trades.