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3 differences between training balance and real account

 Ever felt like everything was going well when you were trading on your demo account? The result of transactions is satisfactory, and the funds on your balance are growing steadily. It seems that profits are much easier to achieve and losses are negligible. Why does this happen when trading on a demo account without investing real funds? Here are the top 3 differences between a practice account and a real balance.


Demo account is free

Perhaps the most obvious difference, but it is. When a trader makes trades with free funds, it is very easy to pay attention only to the amount of profit and ignore losses. The fact that the demo account can be replenished as much as necessary means that the trader's mistakes do not have any consequences, since the trader operates with an unlimited amount of virtual money.


It takes a real effort to be as careful with virtual money as with real money. The only difference between the accounts is that the money in the demo account is not real, which means it cannot be withdrawn. Since the charts are identical (all quotes are the same), the chances of losing or winning are the same on both accounts; however, losses on a real account relate to your actual invested capital and real money.


The demo account is usually traded with large amounts

When you trade on a training balance, your investment is likely hundreds or thousands of dollars. When the investment amounts are so large, if the transaction is closed in the money, the return is likely to be quite significant as well. Trading large amounts brings satisfaction from the results achieved, even if the funds are virtual. This is how our brain works: we are able to get the same pleasure from simulation as from reality.


This contradiction can be resolved by investing small amounts and recording the outcome of training deals. This will give you an idea of ​​how much money you are spending and what the actual profit is.


Real money trading awakens strong emotions

It is easy to see that when you are trading on a practice account, you do not feel any fear. There is nothing wrong with losing money, which can be replenished immediately. However, when it comes to your own hard earned money, each trade is accompanied by uncertainty, fear of loss and greed, the desire to earn more. Real balance doesn't give a second chance. In the event of a losing trade, funds are lost. This leads to irrational behavior that affects the trader's mindset and hence the results of trades.


Preventing strong emotions is difficult, but possible. A good way to handle these and deal with irrational behavior is to record each step. It can include the details of the transaction (investment amount, open and close prices, time, asset, etc.), how the risk is managed, anything that you consider important and what should be considered before entering into a transaction. This can help relieve some of the tension and focus better.


Conclusion

The biggest difference between demo and live trading is the trader's approach, which is usually not deliberate. One of the ways to manage results on real and demo accounts is rational trading and analysis of results. Do you notice the difference in behavior when trading on different accounts? How do you manage your emotions? Write in the comments.

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