And most beginners who learn about investing after achieving demo wins often believe that their demo trading results can be easily replicated on a real account. This has caused some people to feel disappointed because they realize that what they believe is not always true. Why is that?
When you first learn about Forex, you are advised to trade on a demo account before actually trading. Forex demo accounts are the best tools to help you perfect your trading skills.
And most beginners who learn about investing after achieving demo wins often believe that their demo trading results can be easily replicated on a real account.
This has left some people feeling disappointed because they realize that what they believe is not always true.
Why is that?
For 3 reasons.
First: Real emotions accompany real money
Do you think you will be emotionless when making real trading decisions?
This is not as simple as you think. Your trading psychology will be affected when your real account increases or is at risk of loss.
Take a simple example:
You use a Demo account, even if your account has negative money, you still won’t feel the loss because it’s not your money. You don’t lose any money, not even 1 thousand.
But when trading on a live trading account, the first USD you gain is either at risk of losing or you get your first Stop Loss kick, you feel your heart beating faster, more nervous, sweating, shaking hands and even disappointment.
This is your real emotion, this is the emotion that demo trading cannot give you. It’s like when you like someone, you ask and wait for them to respond.
Second: Demo trading does not risk real money
You use a demo account and try to treat it like a live trading account but the truth is that in your mind, you know that there is no real money at risk so your psychology is often more comfortable.
You make lots and lots of mistakes on the demo but you don’t have to feel much pressure because you know you can open more demo accounts and start over easily. This is what makes you lack real emotions and psychology describes this: When you have nothing to lose, you don’t feel afraid.
On the contrary, small mistakes in real Forex trading can hurt your trading confidence and affect future trading decisions. Using a live trading account, you do not have many options to start over, every mistake will be paid for in money.
This makes us see the psychological pressure, stress and losses suffered when making decisions with each real money transaction.
Third: Emotions are the source of big mistakes when trading on real accounts
Trading Forex with a real account means you have to face financial risks. Usually, people with many years of experience will place great importance on determining risk before deciding to invest.
As for new traders, they have no experience and are missing many important things. This includes identifying risks, managing risks and accepting risks at an acceptable level.
And when the transaction is not in the direction of the original target, they have an erratic mentality, do not accept loss, do not accept risks, leading to loose Stop loss and burning their account.
Others, because of the desire to prove something to the crowd, get addicted to Win commands and as a result, Gong Lo feels tired.
Their positive emotions only come when their accounts start to go negative and make some profit.
How to minimize the difference when trading on demo and real accounts
1. Copy the mental state of the emotionless trading you practiced on the demo
You can do this by focusing on the process, not the profits.Take one trade at a time, focusing on sticking to your plan and practicing proper risk management. Trade Forex with an amount of money that you can afford to lose. This will reduce pressure and help you focus on your trades better.
Again, you can do this by focusing on the process, not the profit
2. Keep good trading habits
Write down what is happening in your real trades. How are they different from regular demo trading? Are your trading reactions and decisions different when you trade real money. Would you do something better?