When to switch from a demo to a live account?

An important part of trading is trading on demo account, at least in the initial stages. But, after all, what's the point of earning fake dollars? After practicing on the demo, you need to switch to the live account with real money. You are going to find out when and how to do it correctly after reading this article.

To begin with we would like to point out that technically demo and real accounts are virtually the same. Except that order execution on the demo is a little bit better. But if you are not opening trades every minute with a couple of points, the speed of order execution will not play any significant role. That's why the decisive factor in the difference between trading on a demo and a real account is psychology: the fear and greed that people write so much about. When working with real money all of this is felt many times stronger and if you earn on a demo account, but lose on a real one, then trust me it’s all about you not the stop hunters.

Two groups of traders
As for the transition from demo to live account, we can distinguish 2 groups of people:
1) those who switch to real account too late;
2) those who switch to real account too early.

First group. I know some people who have been trading on a demo account for a year or two and haven't even tried to trade on the real account. And they have a stable profit, a well-established system, risk management and emotion control. When asked "Why aren't you trading on the real account?" they vaguely answer something like "I need to check everything, allocate the amount of money from the budget, calculate the risks etc.".

I do not know what it is called from a psychological point of view, but a similar fear of action, fear of making a mistake, indecision, is present in many people. A large number of people dream of opening their own business someday, read books, forums, come up with ideas, but do not start their own business. Not even trying. It's the same with the demo account: many people get stuck on it and prefer to think that they will move on to a real account "someday".
In my opinion, you just have to decide and do it. There is no other way.


Second group. There is also the opposite of the "dreamers" traders who, after closing a couple of successful trades, immediately get into the real account.
The market will not run away from you! And all possible mistakes are better to make on the demo account, because on the real one you will have to pay for them from your own pocket. That is why you should first take part in education, choose a system or develop your own strategy, gain experience by using the demo account and only then switch to the live account.

3 signs that it's time for you to move to the real world
1. There are more profitable trades than losing ones.
You have to learn how to extract profit from the market, and to do it steadily. It is not so important how many dollars you have earned, it is much more important what percentage of all your trades are profitable. Of course, this all depends on your particular strategy, the ratio of average profit/loss, etc., but in general 6-7 trades out of 10 you have to be successful.

2. You know how to management your capital
Position size management is one of the main factors of success. There is no Forex strategy, which gives 100% of profitable trades. There will be periods when you will definitely incur losses, there is no other way. So, we need to select the size of trading lots so that in case of losing trades, not to lose too much, and in case of successful positions to earn an attention-worthy profit. That is the purpose of any method of risk management. As for specific numbers, I would not advise anyone to risk more than 3% of the deposit in one trade.

3. You Control Your Emotions
No matter what they say, but emotions play a very important role in trading and you must learn to control them. Of course, when trading on a live account emotion is much more emotional than when trading on demo accounts (because there is real money at risk), but you can still build up some experience.

You must be comfortable with losses, because you know that losses are a part of trading, and the most important thing is to have more profitable trades. But you must also take profits calmly: do not fall into euphoria, to keep a sober judgment in market analysis. Excessive optimism often leads to bad decisions. How to be calm in the presence of losses and profits? Very easy: trading must become a routine for you, an ordinary job, for the execution of which you will get a salary.

How much time should I trade on the demo?
Turning to the question of time, you need to understand that the purpose of trading on a demo account is to gain experience. You need to identify all the standard and non-standard points in your strategy, and for that you need to make a substantial number of trades.

So, for different tactics, the time needed to gain experience will be different. Agree, when trading on hourly charts you will get a lot more signals in a week than on daily charts.
But if we call any specific numbers, it is as follows:
- Trade on hourly charts for 2-3 weeks minimum
- Trade on 4-hour and daily charts roughly for 3 months.

Alternative to Demo Accounts
A good alternative to Demo accounts are cent accounts. With a deposit of just some 20-30 dollars, which you do not regret to lose, you will get the opportunity to trade with real money using precise money management. Of course, you will not earn much from these pennies, but it will be a good training in the "combat" conditions.