Sceptical About Demo Accounts

Mr Squirrel · Jan 26, 2009

Evenin' All,

I have been looking into Spread Betting and have just one question... Forgetting the psychology of using a demo account, how accurately do they represent a live account?

I have been mainly using the demo account provided by Capital Spreads, but the question applies to all of them.

I just don't trust the results I'm getting! I'm convinced that it's geared to get you to sign-up and then the live account will not be the same. Also, why would Spread Betting companies offer sign-up bonuses if they weren't sure they'd get it back? From what I've read, Spread Betting companies make their money solely by setting margins on the offer and bid price. Therefore, they don't mind you being successful, unlike a casino for instance. Is this really true, because I'm not convinced.

I guess the only way to find out is to open a live account and see how things go, but I don't want to be taken for a fool!

Many thanks in advance for your replies.

Yours suspiciously,

Stephen

new_trader · Jan 27, 2009

If you think that you may lose money trading because you have an unscrupulous broker then you are in for a real surprise. I'm sure after a few years of trying to be 'successful' and 3 or 4 brokers later you will have a different opinion.

Mr Squirrel · Jan 27, 2009

new_trader said:
If you think that you may lose money trading because you have an unscrupulous broker then you are in for a real surprise. I'm sure after a few years of trying to be 'successful' and 3 or 4 brokers later you will have a different opinion.

Hi new_trader,

Thanks for your reply. It does not answer my question though, does it? Don't get me wrong, I understand what your saying, but what is your opinion of the difference between a demo account and a live account?

Forgive me, but my question has been asked a couple of times by other members in the past and their thread has received no replies. Is it a faux pas of the trading world to be asking this question? If it is, then I apologise, but I'm simply keen to hear someone elses opinion.

I'm not going to be opening a live account for another few months anyway, but I would prefer to suffer disappointment through my inexperience, rather than as a result of the goal posts being moved by the SB company.

I have tried medium to long term trading using various strategies based on momentum, pairs and particularly trend following, but I can't hold it together. I was beginning to think that my personality wasn't suited to trading, but I have been day trading over very short timescales and been pleasantly surprised by my ability to hold it together and be disciplined.

Sorry to waffle,

Stephen

new_trader · Jan 27, 2009

stephen.malyon said:
Hi new_trader,

Thanks for your reply. It does not answer my question though, does it? Don't get me wrong, I understand what your saying, but what is your opinion of the difference between a demo account and a live account?

Forgive me, but my question has been asked a couple of times by other members in the past and their thread has received no replies. Is it a faux pas of the trading world to be asking this question? If it is, then I apologise, but I'm simply keen to hear someone elses opinion.

I'm not going to be opening a live account for another few months anyway, but I would prefer to suffer disappointment through my inexperience, rather than as a result of the goal posts being moved by the SB company.

I have tried medium to long term trading using various strategies based on momentum, pairs and particularly trend following, but I can't hold it together. I was beginning to think that my personality wasn't suited to trading, but I have been day trading over very short timescales and been pleasantly surprised by my ability to hold it together and be disciplined.

Sorry to waffle,

Stephen

Stephen,

You are asking a fair question but unfortunately the answer is academic. You can come to any conclusion about the differences between live and demo trading but in the end, if you want to pursue trading as a profession, it's only the results of your live trading that counts. I will say that if you go DMA then there is likely to be a difference in the fills you get between live and demo if you are trading with market orders. But don't persuade yourself to believe that the fluctuations in price are the result of a broker’s conspiracy to steal your money.

Mr Squirrel · Jan 27, 2009

Very fair point. Thank you, you have confirmed what I've been telling myself - I just have to take the plunge to find the answer to my question. The fact I couldn't find an answer to my question should have reassured me that it's not a shocking corporate scam, but it also means that I have been lucky with my strategy so far (if the word "lucky" is allowed). I think the next couple of months are best spent on more research, alongside a live account with the tiniest amount of funding. I'll use the demo account for trying different strategies, but for the current strategy I'm going to dip my feet in to see how the water is.

Thank you for your time, it is appreciated.

Stephen

adalat · Jan 31, 2009

In God we trust, everything else we test.

Mr Squirrel · Jan 31, 2009

Hello All, There's no need to answer this question anymore... It lead on to me asking whether or not to trust SP companies and I've since found many, many, many a heated discussion on the subject. For the record, I'm quite satisfied that I can trust SB companies, should they be the best option. Besides, I need to focus on making a return before worrying about if someone will pay-up!

Sceptical About Demo Accounts

Mr Squirrel

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Mr Squirrel

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Mr Squirrel

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adalat

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Mr Squirrel

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