Many traders start their trading journeys with the demo account — a free and safe way to test new ideas and trading methods. Think of it as a day trade simulator — the ultimate tool to discover the main tools, learn more about the platform and its features to trade successfully.
All IQ Option traders have access to a $10000 practice balance that can be topped up as many times as they need. However, even though using the demo account for practice may be helpful, it is still not the same as trading on the real balance. Keep reading to learn about the difference between real and demo trading accounts and understand if you may be ready to shift from practice to real trading.
1. Real money means real emotions
When there is no real money involved, you may feel calm and level-headed during gains or even loses. However, when you switch to the real account, you start trading with real funds. Turns out, this is enough to make almost everyone nervous about their trading results — less consistent.
You have probably already heard that having no emotions is essential on the path to becoming a successful trader. However, it is almost impossible to avoid all emotions. What you may do is learn to control them and try to avoid making common trading mistakes. Creating a trading plan and sticking to it might be useful, if you don’t yet feel confident about your trading decisions. You may consider keeping a trading journal to keep track of your results and analyze your performance.
You may get more details on the difference between demo and real accounts in this video explainer prepared by IQ Option.
2. There is no risk involved in trading on demo
As already mentioned, your own money is not at risk when trading on the demo account. No matter how much you win or lose, your balance is still just a number you see on the screen. It’s basically a free stock market simulator, where you can trade all available assets without worrying about potential losses.
When you switch to the real account, though, you might find yourself in a situation when your trading decisions, whether it’s opening a deal or managing losses, are based on the fear of loss.
Applying risk-management tools may help boost your confidence. Basic instruments like the 2% rule and Stop-Loss are considerably easy to understand and apply, while offering a chance to protect your capital and manage potential losses.
3. Perpetuating bad trading habits
Another important point about trading demo vs. real account is that it is easier to repeat bad trading habits when trading with real funds. You might find yourself making the same mistakes again and again: closing trades too early, forgetting to set a Stop-Loss or forgetting about the trading plan.
To address this issue, you may consider trying to focus on the process, not the result, just like you would probably do when trading on the IQ Option day trade simulator. It may be hard at first, as you might be tempted to check the trades every minute and make decisions based on intuition rather than on facts. However, it may get easier over time, as you become more confident and cool-headed.
How to Decide When to Move from the Demo to Real Account?
There is no one right answer to this question, as every person is different. Some traders get the feel of the traderoom using the demo account for a few hours and then proceed to making a deposit and trading with real funds. Others might need more time to test different approaches and trading ideas. So it’s up to the individual trader to decide if he/she might be ready to switch from the trader simulator to trade with real money.
You may also come up with your own list of pros and cons for trading demo vs. real account to figure out if it’s the right time to make the move. However, you should keep in mind that trading on the real account requires that you have the necessary knowledge and perform risk-management in order to manage potential losses.
