Demo Trading vs. Live Account Trading Execution

R

rdlsmith

Are Demo accounts representative of what trading a live account would be like in terms of execution? I'm starting my sixth month of demo trading getting ready to open a real account next month if I do well this month.

The FX Demo accounts seem far better than any demo account I ever looked at for equities. Most of them, when you enter an order, it is filled regardless of the price action or volume behind it.

The FXCM demo account I'm using at least requires the price action to reach your price entry / target to trigger before registering the trade.

While I have done very well, I worry that I might have a false sense of security about my skills. This being due to not only am I trading fake money which is never the same but maybe also because the demo accounts behave significantly different than a live account.

I understand that the mindset of trading real money is different than trading fake money. I've been there with stocks so that's not really what I'm looking for here. I specifically want to know about the platforms and any common things to be aware of regardless of broker.

If my trading strategies work on a demo account, are there any reasons they shouldn't work on a live account? (Provided I control the emotional aspect.)

One concern is being able to execute a trade at the price and volume requested. I've read that the FX is very liquid and that it shouldn't be a problem. I wonder if that is true in non-peak hours for a particular currency. Do the brokers play games with a live account you wouldn't necessarily see with a demo account?

Trading style: I'm not a scalper. I probably average about 3-6 round trips per month now. There are times I've held a trade for less than half an hour but often it tends to be a 5 to 8 hour trade.
 
Quote from CyborgTrading:

We have a realistic DEMO environment for equities. Your orders do not get filled right away when you place them, and we have an accurate fill engine. Also, you can use hotkeys like your normally would so it's an easy transition to trading live. If you would like more information, you can see it in action here:

http://www.youtube.com/watch?v=bBzuPaw0bt4&feature=channel_page
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I was asking specifically about the forex demo accounts and live accounts. Just trying to do a bit more research before putting real money behind the venture.
 
Quote from rdlsmith:

I was asking specifically about the forex demo accounts and live accounts. Just trying to do a bit more research before putting real money behind the venture.
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I guess it's going to depend on which broker you use, what sort of volume you're trading, order type, the time of day, market conditions, and the pair.

Can you give more specifics?
 
Quote from cabletrader:

I guess it's going to depend on which broker you use, what sort of volume you're trading, order type, the time of day, market conditions, and the pair.
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FXCM is the broker I'm using to demo with. I use their Marketscope software, not the MT4 stuff, yet.

What do you define as high volume? 1 million units? At what point do they fail to process the orders? The demo account has 50k in it so I can move more units than I would with a real account.

Order type? Entry, Limit, Market, hey, if there's a problem with any I want to know about it. I suppose on a demo account, Markets would always get filled in total at the Market. Live account, not likely?

Time of day. I've entered orders at 11:30PM and had them hit my target before getting up the next day. I've entered during the day and had to ride it into the night. All times.

Market conditions. When I see the setup that meets my conditions, I enter a trade. It seems to happen 3 to 6 times a month. No scalping here. Just not my style or something I feel comfortable with as of yet. I do fade the trend so I'm not afraid to jump on a price swing that is outside a recent channel.

Pair: EUR/USD
 
Quote from rdlsmith:
FXCM is the broker I'm using to demo with. I use their Marketscope software, not the MT4 stuff, yet.
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Personal preference but I could never get along with MT4 for live trading (mind you I'm a scalper intraday), but for charting I think it's great. As a positional or swing trader speed of placing orders isn't really going to affect you.

Quote from rdlsmith:
What do you define as high volume? 1 million units? At what point do they fail to process the orders? The demo account has 50k in it so I can move more units than I would with a real account.
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They won't fail to process your order, size will dictate slippage on market orders though, but <5 million I don't think you'll have any problem in 'normal' market conditions ie liquid European and US sessions ex fundamental data releases or other potentially fast market conditions.

Quote from rdlsmith:
Order type? Entry, Limit, Market, hey, if there's a problem with any I want to know about it. I suppose on a demo account, Markets would always get filled in total at the Market. Live account, not likely?
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Yes likely, most of the time on market orders, it's just during really volatile times in a fast market is when you'll probably experience slippage. You can control that on most platforms by setting the maximum slippage you'll accept (although I think that's like an invitation to fill at a worse price!)

Quote from rdlsmith:
Time of day. I've entered orders at 11:30PM and had them hit my target before getting up the next day. I've entered during the day and had to ride it into the night. All times.
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If you're working with pending orders most of the time then you shouldn't have too many problems.

Quote from rdlsmith:
Pair: EUR/USD
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Again no problem, it's the most liquid pair!


Disclaimer: I've never actually traded with FXCM, this is my experience of trading with Oanda :)
 
i realise it's been nearly 2 years since the last post, but at present i'm having very similar concerns to the original poster, in particular:

can i expect any major difference in the speed of order execution (market orders) between my simulator and the real thing? my broker is interactive brokers and i'm currently using their paper trading platform. Common sense might suggest that the paper trader may be "faster" than is normally the case, though at least one IB user has assured me that the simulator is in fact SLOWER than the real platform, the reason being that as a paper trader i am "low priority" and my orders will therefore be filled last. Does this make sense to anyone? Anybody agree or disagree with this?

the reason i'm so worried is because my (simulated) market orders have been taking 10 seconds or more to fill, by which time, when the market is moving fast, i'll often have missed the move i was trying to catch in the first place!

your thoughts please, if you have a moment! especially IB users

thanks very much
 
Actually it hasn't been two years. My last post on the thread was 10/05/2009.

I had no trouble making the transition to live trading but keep in mind, I probably have a very different trading style. I'm not jumping in and out trying to scalp. I'll try to pick up a trend, set a stop loss and target. Sometimes it takes days to complete a trade but often it's like 3-6 hours or so. I also don't trade very often.

Given that, I can't tell much of a difference except with a live account the profits and losses are real and after 30 days I don't have to start all over again. :) The actual trading experience as far as entering and exiting a trade is the same.

I use FXCM so this doesn't really address all your concerns. Maybe you should start a new thread to ask about a specific dealer.

Good luck to you either way.
 
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