Many traders have an excellent trading record in their demo accounts. They are doing perfect trades and have a consistent return on their investments. These successful demo traders cannot continue their triumph in their live accounts. They take the live account as an upgraded version of their demo account and trade in the same way. But, in demo accounts, money and emotions are not involved and they can trade the market more like a robot than an emotional human being. As a result, they give their trade more time, keep them open in the market and even if there is an odd market trend, time smoothens the market volatility. When they come from demo to real accounts, they have to keep some things in their mind to become successful. Live trading is not only risky and can lose trader’s money, it is also very much different from demo account trading.
Today, we are going to give you some tips to always remember, so that you do not mix up your demo trading with live trading. If you can follow these tips, you will certainly have fewer risks in the market.
Risks to reward ratios: Most traders who trade in the demo accounts take very high risks to gain a large profit. Their risk to reward ratios are very high. You cannot do this on your live account. You have to understand demo accounts are free of the cost to trade and maintain, whereas your live accounts need real money to operate in the market. If you lost in demo accounts, it did not cut your money. In your real accounts, money is cut by a loss. To be precise, you need to make sure that you are gaining at least twice the amount that you risked in a single trade. The expert traders always trade with a 1:2 or better risk reward ratio to ensure their long term profit in the financial industry.
Use leverage less: Traders are always advised to take less leverage in their trading. It deviates from their trading mindset and you can lose sight of your goal. In your Forex, you need to trade with low leverage. If you are new to trading then you can use Juno Markets demo account to develop a solid trading system. It’s true that at the initial stage you will find it extremely difficult, but with dedication you can easily overcome this obstacle. Always remember that leverage is a double-edged sword, so you need to be extremely careful when you use leverage in your real trading account.
Give your trades time: Unless you are a short time trader in the market, give your trades time in the market. It will ease the market volatility and you can make a profit. If you close your trade early in the market, it will cost you money. New traders in the financial market often close their running trades with very little profit. They fear losing their small profit and thus deviate from their trading plan. On the contrary, when the trade goes wrong they stick to their trading plan unless the market hits the stop loss. In order to make profit consistently, you need to have complete control over your emotions. Always try to focus on quality trade execution and never get frustrated with the losing trades.
Summary: Trading Forex in demo accounts and in live accounts are two different things. You have to understand the difference and trade accordingly. When you switch from a demo to a real trading account, you have much responsibility. As a forex trader, you need to use logic to find the best possible trade setups and trade them with proper money management. Always try to trade the higher time frame with at least 1:2 risk reward ratio, as it will ensure your profit factor.