retail FOREX is a scam. I bet everyone wins big on the demo account and when they pony up the real cash. It disappears quick. No individual trader has any business opening up a Forex account.
Demo trading is for learning the mechanics of the business, like placing orders, dealing with data, indicators, news, etc. Live trading is for learning how to make money. Few make it. Keep walking...
It depends on how you treat the demo. If you don't take it seriously and don't treat it exactly as if it was live money, then when you go live you will be essentially untested with the true circumstances of trading. However, if you treat the demo as real and practice that way, then there shouldn't be a big difference between demo and live, as long as you don't immediately start trading live with too much money. For some odd reason I think a lot of people don't treat the demo the same as a live platform, and that's why you get the discrepancy in results. One thing is for sure though: you should definitely get very, very good on the demo before you ever attempt to place even a small live trade. If you can't make money on a sim, there is definitely no way you are going to do it live. You need to be 100% certain of your system and execution capabilities before you turn on a real account.
Virtually identical to my own experience.I think you must demo trade to start with as part of the learning process,but nothing teaches you more about trading than the pain of losing money.In fact the sooner you can lose some money,the further down the road you'll be imo (provided you don't keep making the same mistakes) I would say that you will probably pay money for every single lesson the market has to teach-sometimes several times over.And you wonder why other people think we're crazy! I occasionally read here,and on other forums,that experienced traders sometimes test new ideas on a simulator. As redneck said, it's a tool for a certain job.But then again,i know lots of guys with very nice tools in their garage that they don't have a clue how to use..
Demo is a waste of time and doesn't help you learn anything. It's like playing poker or blackjack with fake money, you do not, will not and can not treat it like a live account. And if you convince yourself otherwise you are doing yourself a great diservice. The only reason to trade Demo is to make sure your hotkeys and platform set up is working properly. The demo is always slow, you get filled at any price you want so anyone trading volatile stocks will probably be way off on their avg. price. You will do yourself a lot more good trading 100 share lots. If you actually stick to trading 100 shares at a time you will not be able to lose much money, unless you are trading 100 dollar stocks and above, in which case you probably shouldn't be trading in the first place. Start with stocks 50 bucks and lower and trade the real thing. If you are scared to trade 100 shares at a time, in all seriousness, you should probably save up a little more before starting to trade. I would say you need a minimum of 5k to be comfortable doing this and have another 5k in reserve just incase. The hardest way to make a living is if you're scared at the keyboard, even if you are right in the trade being fearful of your size or position is a guaranteed way to lose money.
I've been day trading for a bit over a year and used my sim trading account with IB for the first time this week. I used it for 2 days to practice trading ES (which is very new to me), trading an opening range strategy that I've been hesitant to trade live. I used the sim account to get a feel for entering quickly on signal, putting in a stop quickly, and managing the trade. I found it useful in the "look and feel" arena (it definitely beat paper trading where I jot down my entry and exit prices and check the chart to see stop was hit). Sim helped me react faster, because with no real money is on the line, I had no problem immediately putting on a trade that set up without running through 5 different analyses of the setup in my mind. After trading ES with the sim account, then switching right over to my main PC to put on a live stock trade, I was quick, getting a nice entry price, instead of hesitating as I sometimes do. Then the next day I traded my opening range ES strategy live and took the signal quickly, twice, first time stop loss hit, second time right back in for the real move. So in that regard it turned out to be very helpful. I also used it to trade a high-priced stock I never traded before that had a wide spread. Sim helped me "get to know" this stock and how best to trade around that spread without getting stopped out. I think it's useful to compare how you trade sim vs live and correct any discrepancies that hinder your live trading. I found that trading live, I moved my stop too quickly to lock in profit and ended up leaving quite a bit of profit on the table. I'm sure if it was sim I would've been more patient and let the stop sit at break even for a while. So I may sim trade occasionally to practice improving my reaction time and to practice patience with trade management, but as another poster here said, even trading 100 shares live will beat sim for testing your ability to follow your rules and keep emotions out of trading. (Except when a trade goes quickly and hugely in your favor. Seasoned veteran trader Robert Weinstein taught me the appropriate professional reaction a trader may use in that situation: "Yippie!")
NODOJI... you are completely right. Sim is great for getting the look, feel and comfort with your execution keys. I would only use the sim for two or three days to do this, otherwise i don't really think it helps. As far as learning stocks, the only real way to do it is to be in them. Trade only 100 shares for a month if you have to in order to get a feel for the stocks. The only thing I disagree with is that when you are first starting, instead of knowing how a high priced stock with a ten or fifteen dollar range STAY AWAY FROM IT. I see way too many new guys who will make a few bucks consistently and then get into a stock they think they know from the demo and have no idea how fast and how much it really moves, leading them to lose their whole month. At the beginning just trade the stocks that move and have tight spreads. You can still make 50 cent or dollar moves, it just won't be in 30 seconds. If an expensive stock, say goog for example, is in play believe me when I say you have no clue how it trades from watching the demo.
good post, thats the problem i've always had with demo, never could treat it seriuosly so i never learned anything from it. Real cash on the line is the only way i can do it, unfortunately.