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Switching from a Forex Demo Account to a Live Account

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Switching from a Forex Demo Account to a Live Account

All forex traders have to trade on a demo account before they move onto the live market.  However, there are a lot of traders who wonder when they should switch and what the process is.  It is important that you know what the process of switching is and when you should actually switch.  A lot of traders make the mistake of switching to a live trading account too soon.  This often leads to trading losses because they have not spent the right amount of time practicing and learning on the demo account.

How Long You Should Trade Forex on a Demo Account

The biggest concern that many forex traders have is that they have not spent long enough on the demo account.  Making the change from forex demo to forex live account too soon can be disastrous.  There is no set time period that you should trade on the demo account for.  However, it is often recommended that you trade on the demo account for at least a month.  This allows you to go through all the ups and downs of the market without the risk of losing your own money.

You also have to consider you trading strategy before you make the switch.  If you have traded on your strategy for a month without having to make any changes and being profitable then you should move to a live account.  However, if you are still making changes to the strategy then you should not switch until you have traded consistently for a month.

Opening Your Live Trading Account

A lot of traders make the mistake of opening a standard trading account when they leave their demo account.  This is not the best thing to do as standard accounts have higher risks.  The lots sizes you are using with these accounts are the standard lot and this is the most expensive.  This means that you will lose a lot of money when you adjust to the live market.

It is recommended that you open a micro or mini account when you move from demo to live.  These accounts have smaller lot sizes which mean that you will not lose as much money during the transition period.

Why Are You Losing Money?

A lot of traders are confused by the fact that they lose money when they switch from demo to live accounts.  If you are making a profit on the demo account this does not mean that you are going to make a profit on the live account.  There are a number of differences between the two accounts that you have to adjust to before you will see any success.

The biggest difference is that you will feel trading emotions when you trade live.  As you were not risking your own money on the demo account you would not have felt fear, greed and anxiety.  These emotions hit you when you trade live because you are aware that it is your money that you could be losing.

The demo account order execution is also better than the live account.  With a demo account your order will be executed immediately.  This is not something you get on the live account and the profits you get can vary as a result.

 

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