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Switching from Demo to Live Trading: What to Expect

12:17 PM Aug 27, 2019
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Trading Psychology

Transitioning from demo to live trading is an important step. And it’s definitely not an easy one. The majority of traders quit Forex exactly at this phase because they enter it unprepared. If you want to make your way to successful trading, there are a few things you need to know before you start.

You’re not the only one

Every trader has to go through this process. The only difference is how you manage it. Yes, the transition to live trading is a lot of pressure as suddenly all the risks become real. But all the losses you will have at the beginning of your journey is just a step to your successful future.

If Forex was easy then everyone would do it. And in the end, no one would make profits. So think of this phase as of a necessary tough measure. It will harden you and prepare for your future trading career. Thousands of traders around the world could make it through and so can you.

Market conditions constantly change

The less time you spend trading on demo account the more difficult it might be for you to switch to live. It happens because you haven’t experienced all the possible situations you might face in the Forex. There are so many types of market conditions - sideways quiet markets, slow-moving or high-volatile markets - and you need to prepare for each one of them before you make the transition.

Imagine yourself spending a few weeks trading on a slow-moving market. Your profit shows consistent growth. You are confident in your abilities and finally ready to make your next move. But once you transit to live trading, high volatility in the market leads to a sudden drawdown on your account. None of the tricks you’ve learned on demo account works and you lose your entire investment.

Such an unfortunate situation works both ways. The strategies that show amazing results during high volatility might not work on a slow-moving market.

That’s why before moving to live trading it is important to test every possible scenario you might face in real trading. Spend as much time practicing as you need. If you are prepared, nothing can take you by surprise.

Better start small

Even if it seems that you are ready for everything, it is better not to rush. Start your live trading with the smallest positions you can possibly find. This way you will have better control of your risks and will be able to adapt to a new market environment without losing your investments.

If you’re used to larger trading volumes on a demo account it might seem like a step backward. But this precaution might save you from unnecessary losses. You will be able to increase your position size gradually, as you gain more confidence in the live market.

Learning never stops

Even though losses are inevitable they still should pay off. If you lose money but can’t understand why or how to stop it, then it is just not worth it. Always analyze your trading history and learn from your mistakes. This way your losses will start to work in your favor.

Psychological side

The greatest problem in the transition to live trading arises from anxiety. Fear to lose real money makes any trader question their decisions. Without confidence and motivation to trade, you will most likely keep on wasting your funds and eventually leave Forex.

In order to protect your emotional capital, you should accept the fact that losses are inevitable. Just make sure to set realistic goals, be honest with yourself and always stick to your plan.

Final word

To make your transition to live trading as smooth as possible you should remember one thing - profit should not be your number one priority. In the beginning, you should focus on adapting to new market conditions and building a strong trading routine.

Remember that transition doesn’t happen overnight. Be patient and you will be able to get your financial freedom.

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