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Demo Account Trading

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Are the results of trading with a demo account in any way indicative of the result of trading on the real market?

 

This question is particularly directed at the OpenECry Futures demo platform. But all I am curious about the other demos for other markets also.

 

Cheers.

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The only thing a demo account is good for is learning the platform. And maybe checking out your new system for a short period of time. Just about everyone who stays on sim for more than 2-4 weeks never learns to trade well.

Suggestion just trade FX with a mirco mini account. Hard to hurt yourself but real money on the line.

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You could also try ninja traders platform. it is very close to real time trading. While it is true that just because you can make money sim trading is NO proof you can make money trading real money; it (almost) goes without saying that if you CAN'T make money sim trading, you have NO business trading real money.

 

Hope this helps

T

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Yes. If you have access to the exact same market data feed as with live accounts it would be the same.

 

A more interesting question maybe, would be the psychological aspect of it. If you take it seriously enough as traning for the competition you can get something out of it technically. If the attitude will be "it's not real money so it does not matter" kind of thing it will not be fruitful.

 

If a newbie one would eventually have go live and then there will be the psychological training where you will get the experience of how skillful you are to implement what you did on paper trading.

 

As a recommendation I would reccomend that you have everyting in place before you go live. Trading plan, risk management, trade management rules and so on. Prepare everything as in a real money situation.

 

Wish you good luck,

Laurus12

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The only thing a demo account is good for is learning the platform. And maybe checking out your new system for a short period of time. Just about everyone who stays on sim for more than 2-4 weeks never learns to trade well.

Suggestion just trade FX with a mirco mini account. Hard to hurt yourself but real money on the line.

 

I must respectfully disagree. I started with NinjaTrader (live data feed / SIM trading account) 3+ years ago, have traded live - several times - but primarily stayed in SIM for the express purpose of honing my skills & fine-tuning my indicators & have gotten exponentially better with time. Looking back, there is almost NO comparison to where I am now, as to where I was then. I feel like I've travelled light-years since beginning this journey. I HAVE, however, spoken with several people who did exactly that - opened an account, practiced for a month or so, went live & blew their account(s), some, repeatedly! Anyone who thinks they can go into a bookstore, buy a book on Tennis & go out and win a tournament after 2 - 4 weeks practice, needs to rethink that! Enthusiasm will only carry you so far. ANY subject matter, on average, takes approximately 10,000 hours practice at which to become proficient. Piano, tennis, you name it, can't be mastered in 2 - 4 weeks. Just my 2 cents.

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Wiz you sound like a guy who actually took the time to put together a trading program before they started trading. That is how it is best done. But for most people sim trading and real life trading are not remotely the same. I deal with rookies every day and I can tell you after a point sim trading does not help them. You can play virual Tennis or you can get out there and hit a real ball. In tennis as in any real sport and trading requires 10,000 hours under pressure. Can you become a doctor playing or watching a video?

I do not suggest losing large amounts of money to learn. A 500.00 dollar FX acount , trading .10 cents a pip will do just fine.

I also suggest that if it takes you more than 2-4 weeks to trust your trading system, you may have the wrong one for you. If you can not explain your entry and exits to your 10 -12 year old child you have the wrong one.

Last if a new trader does not have a good money management system in place no amount of sim trade will help you.

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Wiz you sound like a guy who actually took the time to put together a trading program before they started trading. That is how it is best done. But for most people sim trading and real life trading are not remotely the same. I deal with rookies every day and I can tell you after a point sim trading does not help them. You can play virual Tennis or you can get out there and hit a real ball. In tennis as in any real sport and trading requires 10,000 hours under pressure. Can you become a doctor playing or watching a video?

I do not suggest losing large amounts of money to learn. A 500.00 dollar FX acount , trading .10 cents a pip will do just fine.

I also suggest that if it takes you more than 2-4 weeks to trust your trading system, you may have the wrong one for you. If you can not explain your entry and exits to your 10 -12 year old child you have the wrong one.

Last if a new trader does not have a good money management system in place no amount of sim trade will help you.

 

Your anology is a bit off. Sim trading and real trading is not like playing virtual tennis and real tennis. This is like practising tennis with a training partner and playing competition. You are honing your skills and shots while practising and then applying it in match play.

 

One of the big problems with beginning traders are that they don't stick with one thing long enough to see if this is viable, but continually adding/removing indicators. This is very possible and very likely that any profitable system can have two losing weeks in a row. If you only sim trade for two weeks during that time, you might abandon a good system.

 

Also IMHO to say one should trade a micro fx account is probably far worse than sim trading. Different markets have different personalities and by trading one market and then switch over to another is most likely not going to work. To use your analogy if you want to play tennis, you should not start playing racquetball and then enter into a tennis competition.

 

I won't be able to explain my entries and exits to a 10 - 12 year old, but they still work for me. How can you say then that I have a wrong system?

 

I am wondering if you have any facts to back up all the statements you are making? I would be really interested in reading up more about them for background information.

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After opening up a live account I found the limitations of the demo account. I wasnt able to get my orders filled as easily.

 

Still I did find the demo account helpful in learning how the market acts and how to use the platform itself.

 

As for the live trading, it went quite well.

 

Cheers.

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I think it depends on what platform you use when you trade on a demo account.. But its a very good way to learn to platform before you start using it live.. Ive tried several diffrent platforms but the one I like the best is MT4.

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While I'll will be the first to admit that there is no replacement for live trading with 'real' money, demo trading has tremendous value. The reality is 99% of the traders who start will make dozens of errors and most will quit before even really fairly playing out the system they were taught or picked up.

 

At least if you are disciplined with demo trading you can correct many of the misinterpretations of your strategy. Sure it doesn't put you under the fire of real market conditions, but it will ensure that you at least know your strategy. Almost every trader who tries this never even learns their strategy well enough to trade. This would accomplish that. A rule I have is to make 25 simulated trades 100% correctly (not successful -- I said correctly meaning no mistakes - win or lose) - you do that and you are ready with the smallest position sizing possible to go live.

 

Of course live money conditions will wreck many, since most are not able to handle it psychologically but at least by doing the simulated trading you are giving yourself a chance to fairly find out if you're cut out for this -- the other way you'll never know.

 

Agree with the suggestions above - NinjaTrader, Metatrader, etc.. can be nice for simulated trading.

 

MMS

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I'm an engineer and tinkering is in my DNA. Modifying my recipe means that I do backtesting (think engineering computer simulations). If backtesting shows potential, I then move on to paper trading (think building and running a prototype). Only then do I modify my process or introduce a new process for a different strategy into my trading.

 

Both backtesting and paper trading have their limitations in representing actual results in fashion similar to the development steps in my engineering analogy. And just as in engineering, going through the steps reduces the probability of financial disaster.

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Hello,

 

Unfortunately everyone is a millionair in a demo account. The key ingredient missing is the mental aspect of trading...There is no fear when trading in a demo account. So.....it doesn't mean you can't or won't do well when you go " live" but you should be aware of the real differences. Trade small when you start with real money.Use stops and have a business plan and set rules that you follow all the time. Don't overtrade...The most successful traders are the traders who trade as little as possible. Find a couple of setups and trade them over and over and over, rather than jumping from market to market and never learning how an instrument really behaves....Learn for instance the nuances of gold...and study it for months and months, so you know inside and out how it reacts in all different markets...Trading might possibly be one of the most difficult proffesions in the world to master, but if you play it smart, and control your emotions, and learn what really works for the best traders, then you will have a fighting chance.

 

Read some good books on mastering your emotions as well as trading methodoolgy. Understand that this is a serious business that takes time to learn, just like and other job. A doctor doesn't operate on a brain tumor his first day in medical school! Well trading is not different in that you must put in the time that is necessary for you to learn how to do it well. Find a good mentor if possible and watch them trade and study why they do well...

Avoid the frauds who tell you success comes in a minute and they have the latest and greatest indicator that for only $9955 will make you a winner...they are fake! There is no holy grail !

 

Above all, avoid feeling bad if you have a losing trade as the winners will come, and always move on to the next trade with optimisim and skill. Keep your losses small and your winners big, Honor your stops, and follow your rules, and you will join a small select few who trade for a living!

 

All the best,

 

Lg

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I used to love paper trading. I bought paper houses, paper cars, and even a paper boat! when I first started trading (stocks) I paper traded for 30 days. I got to 85% winning trades, then funded, went live and lost 65% of my account in 8 days or so. I had to fight back with the remaining balance to get green. Of course, stock trading was much different back then.

 

Paper or simulated trading is only good for learning the platform, as has been said in some of the comments above. Until you feel the butterflies in your stomach when real money is on the line, you will never be able to truly "simulate" trading. Thats why micro accounts are great. The smallest amount of risk possible with also the real feeling of money gained or lost.

 

The real test then becomes when you ramp up form the micro account. Take it slow and stay with the micro account for a bit until you feel you have the consistency to move higher.

 

My 2 cents at least

 

tiny

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Two things come to mind:

 

1. regarding futures trading platforms, my experience is that the difference between a live and a demo account can be huge, as demo orders are not routed for real, nor are they subject to first-come first-served rules that apply IRL, where you will stand in line after those who simply are faster, and they will not be few. Forex on the other hand (not currency futures but actual forex) tend to be closer to reality even with a demo account. One reason being that the forex markets are extremely liquid most of the time, especially if you trade the majors, so switching to a real account is more seamless.

 

2. Many tend to point out the difference between demo and live trading in terms of the pressure. Personally, I have to disagree. I guess it depends on you as a person. If you trade the demo with a serious mind, sticking to your rules, taking the trades that you should according to your plan, not taking the others etc, you should be dead-on. If switching to real money makes you goof, you probably spend to little time on the demo, or you are trading to large positons, or both. Look at the demo trading as a test that you need to pass in order to be eligible for live trading, that should put the right amount of pressure on yourself.

 

Anyway, since you are in the futures markets, be very careful when switching from demo to live. You need to be prepared for some not-yet-experienced slippage to say the least. Take care.

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