When Should One Switch From Demo To a Real Account?

Hello, dear readers. Almost everyone in Forex began trading from a demo account with virtual money. However, what is the sense of earning dollars you cannot buy real things with? After some practice, one should switch to trading with real money. This article shows you when to do it and which is the best way of doing it.

The differences are explained in between trading in a forex practice account and trading in a real account in this article.

Two groups of traders

It usually happens that when switching from demo to a real forex trading account there are two groups of traders distinguished:

1) The ones who switch to a real account too late; and

2) The ones who switch to a real account too early.

The ones who drag the cat’s tail

There are traders who “are sitting” on the demo account for several years, and have never tried to trade in a real account. They earn the stable profit, have a trading strategy, know the money management principles, and control their emotions. In answer to the question, “Why are you not trading in a real account?”, they give a very vague answer it is something like this: “We need to check everything, distinguish a sum of money for a deposit, count risks and in general..”

I do not know what psychologists would call that, but a fear of such actions (not only in Forex), fear to make a mistake, and resistance is a trait found in a lot of people. All of them, as if they have already discussed, say that they dream about their own business, read books, forums, come up with a lot of systems, improve them, create ideas, schemes, but they never do create their own businesses. They do not even try. The same happens with the demo account.Many novice traders get stuck in it and are prone to thinking that “someday” they will switch to a real account.

I think that there is only one way, in this case, that is to resolve to switch and to do it.

The ones who are running against a train

It is also in contrast to “dreamers”. These are the traders who have already made some successful transactions, in a “real” account.

I was like that once, too 🙂 I remember that I opened a demo account, clung to a moving average to see if the indicators were falling and I needed to sell! I have opened a selling order and taken such risks that there was not enough money to open a position. After some time, I noticed a small profit appeared. It was necessary to fix that. In a half of a day, I earned 7000 virtual dollars and was thinking: “I am rich..” And soon I have opened a real account where, of course, “I have burned” my money because I started closing my orders immediately when a position was in a small minus, I was just afraid. Looking back, it is funny to remember that.

Well, I am not the only one to switch to a live account too soon. A lot of people who see a small profit in a demo account immediately switch to a real account. Some of them even do not know any Metatrader 4 buttons value.

Remember: Forex is not going to run out on you! So do not rush to make the switch to a live account. It is best to make your biggest mistakes in a demo account and learn from them because it is not real money. Whereas, with a live account you will have to pay for everything from your own pocket.

3 indications that it is high time you went to a real account

1. There are more profitable transactions than unprofitable

You must learn to get a stable profit. It is not important how many dollars you have earned, it is much more important that your trading was profitable over a period of time. For example, when placing 100 orders you will be in a plus, or you will show a positive result over half of a year.

2. You attentively follow money management rules

Money management is one of the most important success factors in Forex. There is no strategy, or there are no robots, which give 100 % profitable transactions. There will always be sometimes when you make a loss, you will not run away from it. Therefore, it is very important to trade the orders of such a size that when there are adverse conditions, you would not lose much, and when there is a successful series you would earn a stable profit. That is what the aim of money management is. I would not recommend risking more than 1-3 % of your deposit in one order.

3. You control your emotions

Controlling your emotions (psychology) is a cornerstone of successful trading. Do not faint if something is not successful from the very beginning, you just need to learn to control your emotions. Unfortunately, only in real trading are you going to feel your true emotions and know how you deal with them. Everyone responds to their emotions in a different way.

Do not worry excessively about losses. You are going to make some losses in your Forex trading, that is the part of the game. It is more like a marathon than a sprint, and in the long-run there will be more profitable orders. Nor should you become too euphoric about your successes. That can lead to over-optimism and you will make unnecessary and costly mistakes.

How should one reach a mental balance in trading? In a very simple way, trading must become a routine for you, an ordinary job for which you are paid salary.

How much time does one need to trade in a demo account?

It is important to understand that the aim of trading in a demo account is to gain experience. It is important to experience, everything that can happen in trading. If you are working in accordance with a concrete strategy, you have to brighten its standard and non-standard sides, by making many trades. I suggest making at least 100-200 transactions. Of course, those strategies can differ, for example, when you are trading in a day time frame (D1) to get so many signals you will need much more time than scalping after 5 pips. However, you need to have mastered trading and are ready to show to the world what you are worth.

Alternative for Forex demo accounts

Cent accounts is a very good alternative for demo accounts. If you have 20-30 dollars which, I think, will be not a pity to lose, you will get the opportunity to trade real money following accurate money management rules. Of course, you are not going to earn anything special with cents, but you will indeed feel “a taste” of real trading and that will, of course, be a very good practice.

Take care. I wish you success!