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Is There Really A Difference Between Demo Trading And Live Trading?

By Rob on November 16, 2017

Reading Time: 4 minutes

Is There Really A Difference Between Demo Trading And Live Trading?Many first time traders may feel that there really is no difference between demo trading and live trading. If they’re good at the former, they will be good (and profitable) at the latter. However, once they gain more experience in live trades, they will realise that there is, in fact, a big difference. But it’s not about the brokers or the trades or the amount of money – that big difference is all in your brain, and if you can’t get over it, trading will become a bore.

It’s A Physical Thing Too

It’s true that there is a definite change in brain function when you move between demo trading and live trading, but there is a physical change too. When you put that first live trade on, we’re sure your heart beat a little faster. We’re sure that your palms got sweaty. We’re sure that you couldn’t sit still. These are all very common physical things that happen to a trader who switches from demos and live trades. It is exciting, after all. It’s something new, and anything new brings out a little anxiety even if you do know what you’re doing. The thing with live trades is that there is now real money on the line, and that makes a lot of difference in how the body reacts. Remember, though, that the body is only taking cues from the brain, and your brain is therefore sending signals telling the body to get nervous and excited all at once. If you’ve got everything worked out in advance and you’ve done enough planning, your brain won’t have anything to say.

The Excitement Is Too Much

demo trading and live trading

Of course, having a good plan and implementing it when changing between demo trading and live trading is often easier said than done. You might start off with all good intentions, but once you get a sniff of a winning trade, the excitement can be too much and you end up spending more money than you intended – perhaps even forgetting that you’ve changed between demo trading and live trading. The only problem is, this is your cash, and when it’s gone… it’s gone. However, the brain starts to kick in at that point (again – we need it, but it can be a real problem sometimes), telling us that we can make that money back. We just need to trade some more. Big mistake, though. Throwing trade after trade at the markets and hoping that something sticks will only get you deeper into debt. Your trading account will be empty, and you’ll wonder why demo trading was so much fun if live trading is such a washout.

Only Trade What You Can Afford

The ‘only trade what you can afford’ motto is a good one. In fact, it’s the best one you’re likely to hear when it comes to trading, and it’s the main difference between demo trading and live trading. In demo trading you can trade however and whenever you like with no consequences. You lose? So what? Trade again, trade differently, see what happens. You win? So what? Throw that pretend cash around and if it all goes, it’s no skin off your nose. In live trading, you don’t want to do that. Unless you have unlimited funds and you really can afford to literally throw money away, make a plan. Stick to it. Don’t let your emotions (or your brain) get you into trouble.

What’s The Point Of Demo Trading?

Is there really a point to demo trading? Can we learn anything at all from it if it’s so different to live trading? If even our brains and bodies pick that up immediately? Well, yes – demo trading has its uses. In fact, it’s the difference between demo trading and live trading, that emotional response, that is a teacher here. That difference shows that live trading really is real, and it should never be ignored. If your brain is telling your body to react in a certain way, try to understand why. It’s a fight or flight instinct, and as ever when that happens, it’s time to look for the dangers. What you really need to do is to make your live trading the same as your demo trading in terms of the emotion you express (which should be precisely none). Demo trading has the emotion removed already; in live trading, you need to do it for yourself.

Make Demo Trading And Live Trading The Same

In order to remove the emotion from live trading, you need to start with your demo trading. You need to play the demo trades as though they were real – no guessing, no leaping, no going too far. Start by pretending the money you’re trading with is really yours and only trade what you can afford. This will immediately put you on the same level as a live trade. Next, accept that losses will happen and, when they do happen, make sure you don’t rush into a new trade to make up for the loss. This is essential. Think about each trade and ask yourself why you are considering it. Ask yourself if you truly believe it will is the first step.


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The Lazy Trader is a publishing brand dedicated putting the fun back into finance, presenting powerful wealth creation strategies for a better world.


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The Lazy Trader is a publishing brand dedicated putting the fun back into finance, presenting powerful wealth creation strategies for a better world.

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