When to Transition from Demo to Live Trading

So you’ve been trading for a while on your Demo account and you feel the time is right to move into a Live trading account. But how do you know?

While there are no set conditions you need to meet before you make the change, there are factors that will help provide a good indication. Let’s look at some of them...

Have you done your time?

There’s no specific amount of time you need to trade on a Demo before making the move to a Live account, but it stands to reasons that you don’t want to change too quickly - just as there’s little point in waiting a long time.

If you were to open a Demo trading account, do one or two trades and change to a Live account the next day, you probably haven’t spent enough time getting to how the system works. Conversely, if you’re trading regularly on the Demo account for months on end without any success, you should consider whether trading is for you.

At MXT, our free Demo trading accounts are available for 30 days. We find that if clients are trading regularly on a Demo account for about a month, they get a pretty good understanding of how the market works, how their strategy works and what they can realistically expect to achieve.

Are you emotionally ready?

A Demo account is fundamentally no different to a Live account as it has all the same features and functionality. When you make the transition, the only difference is that you’re using your own funds instead of virtual funds. But it’s a big difference – one that attaches an emotional weight to your trading decisions and can alter the way you trade. And the more you place on a trade, the more emotionally involved you’ll be.

In an ideal world, you could completely remove emotion and be objective about all your trading decisions. But - unless you’re using an EA - that human element will always have some effect and you might need some emotional reinforcement in your decisions. For example, try to remember that if you’ve been trading successfully on the Demo account, there’s little reason to doubt you can trade successfully in a Live environment by applying the same strategy.

It is extremely important to look at how your personality and trading psychology will affect your trading style - whether it be live or demo trading.

Can you afford to lose?

Any time you lose a trade on a Demo account, it doesn’t cost you anything. But on a Live account, when you lose a trade you lose real money. And regardless of how much you believe you’ll trade in the exact same way in the Live account as you did in the Demo, you probably won’t (refer to "Are you emotionally ready?", above). So you need to accept that, due to the risk inherent in all trading, some loss is a part of trading and it happens to every trader.

The fundamental part of loss is whether you can afford it in the first place. If not, you should consider how and why you’re trading. But if you’re prepared for loss, you can accept it, learn from it and use it to become a better trader.
Are you ready to adapt?

If you find you’re not trading as effectively in the Live account as you were on your Demo account, how prepared are you to change the way you’re trading? Ideally, you’ll have honed a strategy in the Demo environment which, if you stick with it, will lead to profit in the long run. But if that’s not the case, your experience with the Demo account should still have set you up with the fundamentals you need change your approach. Perhaps it’s something as simple building confidence by trading smaller lot sizes or trading in less volatile periods.