Why do traders make money on the demo while failing on real accounts?
Do you know the main difference between the demo and real trading accounts? How will both trading accounts help you gain successful profits in less time?
We all know that demo accounts have been quite popular among novice traders for learning some basics of forex trading and how it works. But do you know why the traders can make money on the demo while failing on real accounts? Why is it so?
More money in demo trading means more profit.
When using a demo account, a trader generally starts the trading with the maximum amount of $2000-$4000. By investing such colossal capital, it is evident that the trader will make a more significant size lot for opening the trade. And naturally, they will make a bigger profit.
But when it comes to real trading accounts! In the real trading account, the invested amount is not that high. And investing in a small amount will lead to a smaller lot size due to which the profit is equally tiny in percentage.
In short, the whole game is about the capital which you are investing in the trading account!
The not understanding timeframe in the live trading account
A demo account is entirely free from the timeframe, due to which making a profit is not that hard. But as a trader steps into a live trading account, their lack of knowledge about time frame charts, will be a hurdle in making a profit.
Most newbies want to try and trade. They have an idea of daily trading, and they all seem to want to look at a chart with a short time frame before focusing on a daily chart. Who can blame her?
With all the misinformation on other sites and forums, it’s easy to trigger sign dependence by detecting motion charts in 1 and 5 minutes. However, you need to know quickly that these time frames are pretty noisy.
The real story of the brand can only be read in more extended time frames, zoomed out, and see the whole picture. Daily price columns communicate information throughout the day and, as a result, carry more weight.
Have unrealistic expectations
When using a demo account, you have no expectations from the account to make some profit. Therefore, you are free from any trading. And eventually, when you step into a live account, you follow the same rule, which can stop you from making a profit.
Making expectations and not trading with your mind is one major aspect due to which you cannot make high profits in the live trading account.
Whatever someone says, forex trading is not an easy way to get rich. Being competent enough to generate income is not a sprint – it’s a marathon. Success requires repeated efforts to find appropriate strategies.
Seeking collateral or forcing the market to provide abnormal returns often puts traders risking more capital than they need for potential income.
The former gambling discipline with unrealistic profits meant abandoning risk and money management rules to prevent market indebtedness.
Final thoughts
To end with, creating a demo account as a starter will offer extended protection in which an FX broker will learn the basics of trading without risking the real funds. Thus, it allows you to manage the trading market, and let you perform all the functions efficiently.
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