What is the Difference Between Demo and Live Trading?

One question I got asked recently at the website is what is the difference between demo and live trading? Part of the reason I was asked this is because their trading is going well on demo and that they are concerned that when they transition to live trading this will change..

Below is my response to this question..

In relation to feed there is no difference between a demo and a live trading account. So in other words if the demo account is the same account type as the live account type the broker offers then they are the same. The only exception to this is some market maker brokers ( or unregulated brokers ) can manipulate spread costs, reduce execution speed or give re-quotes.

I suggest traders to use a good reputation STP based broker. To find out what broker I use and why click here.

difference between demo and live trading account

The main difference of trading live is Psychology..

When trading live real emotions come in that were not present when trading on a demo account. The reason for this is you are now trading real money and so risk is now real.

This does not however devalue the learning curve when demo trading and I highly recommend all traders to trade on demo account before going live. In fact, I suggest traders to not trade on a live trading account until they have been profitable on a demo trading account for at least 3 months or more. Trading on demo allows a trader to learn the skill of trading without risking real money such as entry refinement, money management, risk management and other important aspects.

How to not let Psychology effect you when going live?

( 7 ways of keeping emotions controlled when transitioning to a live account )

  1. Learn the trading strategy you are using and trading plan on demo before going live. Make sure you are not breaking any of the rules of that method or trading plan.
  2. Build trading confidence before going live.
  3. Trade with a small account when going live and over time increase account size as you get used to live trading. I suggest when increasing account size to do this in steps.
  4. Keep risk at a comfortable risk level that your account can handle, I suggest using a comfortable level of under 2%. Make sure that risk is low enough that your account can handle a losing streak.
  5. I suggest not watching your trade after setting up the trade such as after setting stop loss, management points and targets on that position. Watching a trade has little to no benefits to a trader. Instead watching a trade causes an emotional attachment to that trade which often leads a trader to close a trade earlier than the management points set on that position. Traders often refer to this as sitting on their hands when watching a position. It is easier to sit on your hands when you are not watching every second or pip of movement. Also watching a position is wasting your time when a trade has all the management aspects already set.
  6. Stick to the process of that method, remember this is the method that you traded profitably on demo, so do not let emotions when risking real money cause you to break the methodology trading rules.
  7. Do not risk money that you cannot afford to lose.

For more on Psychology ( video ).

Have any questions on this topic? Let me know by commenting below.

About Timon Weller

Timon Weller is the professional Trader behind the blog Forex Reviews as well as a Teacher of Price Action Trading and creator of the popular Training Series teaching people how to trade Price Action effectively called The Engulfing Trader. For other Forex Training available here at Forex Reviews click here.

For more on Timon Weller Click Here. To Learn more about How to Trade the Market and get updates Click Here.


  1. Christopher says:

    Hi Timon. So true what you mention about emotions. I recently started trading a small live account but it took me so long to open that first trade; I had to laugh at myself. I analysed the setup from all angles even though I had been using the same setup rules in demo successfully for months and back tested the strategy, etc. I just wanted to be sure.

    The other important aspect is the risk you are comfortable with. The dollar amount you are willing to risk determines whether you are going to be watching the trade all the time or not. If the risk is within your limits then your emotions are in check all the time.

  2. Hi. Thank you for sharing this blog article as it answered my confusion regarding the matter. I am very new to Forex trading industry and the tips you gave are helpful. You are right that when it is live trading, mixed emotions will come because different factors can cause as stress. Demo trading is the best option to gain confidence for a beginner like me. Also, the tips that you included to minimize my emotions to get through the transition are useful. I will try to adopt the guidelines you have listed in order to prepare myself when going to live trading.

  3. derrick chong says:

    Thanks for all your guidance through out, you are always been helpful.

  4. Lucy Brown says:

    Hi Timon. I thought that I knew the system, did the backtesting and was doing great in the demo account. Then when I switched to a live account, I started losing money. Now, I’m back in the demo again, using your systems and making money. Hanging in there. Thanks for the advice and the listed guidelines. They have been really helpful.

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