How Long Demo Trade Before Going Live

by Feb 6, 2020Trading Psychology2 comments

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How long demo trade before going live is a decision each trader ask at the beginning.

Deciding to go from demo account to live account should not be a problem if certain points are confirmed. Those points should verify that you are ready to go on live account.

When you enter into Forex trading as a beginner you need to learn somehow and somewhere how to trade. When I have started trading on Forex market I really did not know anything.

I did not know what is Metatrader, where to download Metatrader, how to open account, how to use Metatrader, which tools should I use and when.

If you are here then you already have Metatrader or some other trading platform. You know how to open a trade and which tools you need to use in order to trade.

If you do not know anything about trading do not worry, it is ok. This post will give you more good stuff than bad ones.

How Long to Demo Trade

How long to demo trade is the time you need to invest in which you learn how to use the tools to trade on the Forex market. Those tools should help you in your trading to earn money.

Before going further I will try to explain you why demo trade is crucial and why it is important to trade on live account. 

Real Life Example

If you have played need for speed game then you know you could select the best car, put all the improvements on it, the best rims, nitro, any color, speed up the car to the maximum and nothing would happen to you.

Anything you want you could do it. It was free because you could earn virtual money. There were no cost to you.

When you go to the street you could drift in the corners, hit the obstacle on the road, hit another car without damaging it and so on.

That way of driving is like trading on the demo account. Whatever you do on the demo account you can reset and start again. There is no damage to your trading account and you do not lose any money.

When you take a car in real life you need to pay attention to a lot of things. Is the car clean, is the car functional because of safety. If there is any damage you need to pay for repair.

When you go to the street driving the car you are obeying traffic rules. You need to watch out on your safety. You do not want to hit something or someone.

If you do hit something or someone you will need to pay for that or you will hurt someone.

The pain that can happen is to lose money for repair. The money you are working 09-17h for each day. If you hit someone you could feel the pain because of the jail in which you could end up.

When you feel the pain you will be more careful. You will pay attention on what you are doing. You will lower your risk.

But if you are reckless you will damage the car and you will lose the money. 

The List for Demo Trading

Same thing happens on the live account while trading. When you feel the pain you act differently. If you are reckless you will lose all of it without paying attention to the rules.

But if you are careful then you will drive slowly, watch out that the pain does not catch you up.

I hope this clarifies what demo means and what live account means. Demo is just for learning and playing around. Live account brings more emotions into trading and the results are different.

I will show you a list of all things you need to cover while you are on the demo account before going on live account.

This is the list you should know when you ask yourself how long demo trade before even thinking going on live account. Not knowing one of these points you should not think going on live account.

Here is explanation of each point so you get a clear picture why you need to know all the above listed. 

Learn What is Metatrader 4 Trading Platform

After you download Metatrader 4 trading platform you need to get know everything what platform offers. By knowing all what there is you will know what to use and when to use to get the trading easily done.

Trading platform offers many options and ways you can trade currency pairs. That way you will know how to select desired currency pair for trading.

How to Open an Account and Login to an Account

When you download Metatrader 4 trading platform you do not get any account with it. You need to open new demo account on which you can practice trading.

When you open demo account you will define which balance should be on it and what leverage is the best to select. These are the main parts of demo account and you should learn them in details. That way you will be prepared when you decide to open live account.

If you do not know how to open the account, how the login works on trading platform, you cannot start with live account. That is why it is the best to learn these things on the demo account.

If you make a mistake on the demo account you can easily close that demo account and open new account.

If you lose all the money on the demo account you can open new one with new initial balance.

Which Tools you Need for Trading

When the trading platform and demo account are prepared you need to learn which tools you need to start trading.

First you need to prepare charts in a way so they are easily readable. You should plan to have charts clean as much is possible without special indicators or expert advisors.

Learn about indicators that are available so you know which one to use if you plan to have a trading strategy that involves some indicators.

There are tools for drawing which you need to know how to use them.

Read more: How to Setup Chart on Metatrader 4 

Know How to Open and Close an Order

While learning which tools you can and you must use, one of them is how to open new order with button click.

If you want to trade you need to know how to open a trade. When you want to open a trade you need to know which parameters you must enter so your order is executed.

There are crucial parameters you should enter on each order and never forget to set them. Those are Stop Loss and Take Profit level. They define when you order will close if you have losing trade and when the order will close when the trade is profitable.

You need to understand what is Lot Size and Volume in each order which defines how much each pip will be worth. The Volume is important because with it you will define will each pip be worth $1.00, $10.00 or more.

More the pip is worth, more money you will earn or lose by each pip move.

For you as a beginner this is very important because you should avoid opening an order with to large volume.

Read more: What is Lot Size – Maximize Your Profits

Make a Trading Strategy

Now, this is the main part you should have when going from demo to live account. The trading strategy is the core of trading which will define will you earn or lose money.

Trading strategy contains written steps that defines when you will enter and how will you enter into the trade. Those steps helps you to make same decision each time when you want to open a trade.

The goal is to sharpen your trading skills, to prepare yourself to adapt on changing market.

Sometimes the market will be highly volatile and sometimes it will not move so much. You will need to adapt your trading strategy to stay profitable.

Trading strategy should be tested on the demo account and confirmed that it is profitable. If the trading strategy is not profitable you need to find one that is.

You do not want to start trading with real money when your trading strategy is not validated as profitable one. 

The Learning Process While Demo Trade

The list I have wrote above is the learning process you should practice on the demo account that long until you learn all what is in it. That process should give you the basics about trading on the Forex market.

Have in mind that this learning process can take a while because you need to learn a lot new stuff. If you did not encounter similar terms and tools earlier, like in stock trading, you will need time to understand everything.

When I have started with Forex trading it took months to understand all what was on the Metatrader 4 trading platform. Everything was new to me and I never encounter something similar even I am technical engineer.

To understand basics around Metatrader 4, with your daily job and without mentor, you will need around 3 months. After that you need to focus on making trading strategy which can take half a year or a year.

Experience you get in that time must be enough to prepare you when the market changes the way how it works. The market changes all the time and if you are on the demo account to short, without experiencing the same situations, you will not adapt fast enough on real account.

Do not jump into live account to learn these basics and lose all the money you have invested. Take your time and demo trade long enough until you learn all what is needed. 

Practice on Demo Trade Towards Live Account

By practicing on the demo account at the end you will have a trading strategy. When the trading strategy is written you will have a lot of knowledge to start trading on live account.

I like to practice what I read so you can follow my path.

I have learned everything about demo trade that is called technical stuff. And I have made a mistake when I have gone on live account.

That was when I started without trading strategy.

What happened next was that I have started to open trades without knowing why I have open them. I just wanted to start trading and to see how money comes to my account.

The problems have started to happen.

When I have open the trade I had doubts is the trade correct. When the trade started to be losing one I have closed that trade with loss. Then the price started to move in my direction.

I have closed winning trade after which the trade have continued even more in my direction. If I have had that order open I could earn even more.

But I did not have strategy that tells me where is the exit and when I felt that I could lose that small win I have closed the trade.

You should learn from my mistakes and learn all what is necessary on the demo account before going on live account. Do your home work and make the trading strategy that is profitable. 

Do not Demo Trade too Long

Here is a hidden part that can harm your trading results when you start with live account.

If you stay on the demo account for to long and you do not experience live account early enough you will adapt bad trading habits that do not work on the live account.

Some of these bad habits is to open high leverage or lot size which on live account will destroy your account. To prevent this, have the same amount of money on the demo account and on live account.

There are other bad stuff you can have on the demo account which you do not see until you start trading on live account. The emotions that shows up on the surface while trading on live account can be fatal.

When you trade on live account some bad habits will emerge. Those are habits that you have and that are not accepted as a habit of professional trader. Then you need to fix them and become better person.

If you demo trade to long maybe you will not see the bad habits and on the long run they can harm you. There are traders that cannot change themselves and after certain period they quit from trading. As an excuse they say trading is hard and impossible.

You should demo trade for few months until you learn technical stuff and then move to live account.

What Demo Trade Cannot

I want to give you insight what you can expect during demo trade but in a way where demo trading cannot help you. It is the part you can only learn while trading on the live account.

Think about this like learning how to drive the car. When you are in driving school you are learning all the rules you must obey while driving. You also learn the basics about the car.

But when you sit down in the car by yourself then you see what you have not learned in the school. You have to think and react on different situation during the drive.

Is there car that do not follow rules and you need to adapt to that situation so you do not get hit by the bad driver. Maybe you need to react fast when there is car accident in front of you.

Simply, you need to adapt to the current situation on the road and you need to improve some skills you did not needed up to that moment.

Demo trade cannot teach you about how you react to the pain and emotion of losing your own money. You need to lose it in order to know how will you react.

Demo trade cannot prepare you for the times when you move your stop, hoping the price will revert to at least somewhere near break-even. You need to see that happen when you move your stop loss and the price continue going in the same direction and your loss increases.

Demo trading offers you to lose all the money you have on your account and then nothing happens. You just open new account with another balance and you are ready to trade again.

But when you lose your money on the live account you will not easily say I will just invest more money and start again in same way.

You will think again where did you make a mistake. Next time when you want to open new order you will think is the decision correct so you do not lose money. 

Learn About Yourself

You need to learn about you and your way of response on certain events. You need to learn how react to the pain of loss. How will you unconsciously avoid scenarios that will cause you pain.

You need to understand that these are defense mechanisms that have been developing since you were baby. It is natural to defend yourself from the pain. It is in our core being predetermined to survive, to avoid pain and resist to.

While you are trading because of the money and the only thing you can lose while trading is the money, the loss of money will cause you pain. Loss of money will activate defense mechanism and you will react in way that is not allowed in trading.

The only way to defeat this problem is to trade on live account with your own money.

Experience will teach you how to react on certain events that cause you pain. You will find the way how to overcome that problem and to succeed in trading. 

How to Move From Demo Trade to Live

To help you make a smoother transition from demo trade I will tell you what are the smart moves to make that happen. 

1. Invest Small Amount

When you decide to move on live account invest really small amount. That amount should be small enough that you can accept if you lose it at the start.

Always plan to invest what you can afford to lose. I think you have come across this saying before.

And it is true. Later on if you lose that money you should not say that it was your life savings. 

Invest Half of Your Investment at the Start

Even you have profitable trading strategy on the demo account as a first step with live account I would suggest to invest half of your planned investment.

If you lose that half you will have second one for later trading after you go back on the demo and find out what was wrong with your trades on live account.

You should protect yourself from losing all your money when going live for the first time. 

Any Investment Should Pay Off

When you invest your real money and you lose it, have in mind that lost money should be spent wisely. Each time you invest money that money should be spent for something.

In Forex trading that money is used to earn more money. And that is when you are profitable and you bring money to your account.

What do to when your trading is not profitable but it is losing your money?

You need to learn the lesson from it. What have you done wrong and where is the cause.

You should not let that money disappear just like that. You should look into that money as an investment in you and your knowledge.

It is similar like college.

When you pay tuition for your semester you know what you will have at the end. The knowledge or experience is the outcome and the same should be in Forex trading when you lose your money. At the end you must have some result or you are trowing your money from your pocket. 

2. Do Not Lose the Reason for Trading

During your trading on the demo account and then on live account you should pay attention to your emotional status. By the emotional status I mean your willpower and desire to trade on the Forex market.

When you start to lose your money or you do not find profitable strategy at the start you could lose your motivation. If you do lose motivation you will not succeed and you will eventually stop trading.

You have to set your goals and expectations at the start. Those goals should be realistic and they should be divided into small steps that are achievable. 

3. Money and Only Money

Your motivation for trading should not only be focused on making money. Even though the main reason to join Forex trading is making money, for a long term success you should focus your motivation to other things and not only the money.

If the money is the only thing that pushes you forward then you will lose your motivation very quickly when you see that there is not easy money.

Motivation at the start should be focused on making trading strategy, discipline, being patient, reading the charts, using the tools for technical analysis. Become a professional.

All that should make you happy and the money should be somewhere between those things. The willpower and happiness for success and being better will move your forward. 

How Long to Demo Trade if I am Profitable

If you are in this situation then it means that you have covered all the necessary parts I have said at the beginning.

To give a good answer here are few steps you should do. Use same account size on different accounts, on micro and mini account.

$100 account – for few weeks

$500 account – for few weeks

$1,000 account – for few weeks

The goal is to see how will you behave when there is volume that do not give you enough money. Maybe you will over size your trade and break your rules.

Maybe you will repeat the same result on each account size. If you repeat the same result on each account you have confirmed your success and you can continue with real account. 

Conclusion

It takes time to learn how to use the trading platform and how to open order on the trading platform. It also takes time to understand how the trading works and how to open or close order in a proper way.

When that is done it also takes time to develop a profitable trading strategy.

These few steps are the ones you need to learn on the demo account. Everything else will come eventually when you start trading on live account. So take your time on the demo account for few months and start with the live account with small amount.

Live account is real school that will teach you the most and show you where you need to improve to become better and start earning the money.

There are hidden obstacles you cannot see while demo trading and which are the major obstacle to become a profitable trader. They are manageable and you can beat them but you will need to work hard.

I have prepared FREE PDF with steps which you can use as the checklist when developing your road from Demo to Live Account. It is easy checklist which any beginner or experienced trader can follow.

The list will tell you what you need to know on the demo account before live account. It will also give you rough time lime how long you need to be on the demo account.

I have put answers to some usual questions all beginner traders in Forex faces at the start.

Frano Grgić

Frano Grgić

A Forex trader since 2009. I like to share my knowledge and I like to analyze the markets. My goal is to have a website which will be the first choice for traders and beginners.

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2 Comments

  1. Carmina Wilson

    This is very detailed and full of information. I could have read this when I was starting out that should be very helpful. I am still with fx leaders and couldn’t be any happier.

    • Frano Grgić

      Hi Carmina,

      Thanks for the comment.
      I am glad that it is helpful.

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