Demo vs. Live Trading: Different Results?

Demo vs Live Different Results

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In this Brisbane, Australia Forex trading vlog, I share with you what can be causing your different results when going from demo trading to live trading. Vlog # 434

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Today I wanna talk about something that's a common problem for traders and this is all about what if your results in live trading are different than your demo account.

What's up guys? Welcome back to Brisbane in Australia. Once again another day here in the beautiful city, I love it so far. The weather here is really hot, and something I cannot like. I really missed in Melbourne, but anyway

Today I wanna talk about something that's a common problem for traders, and this is all about what if your result in live trading are different than your demo account. So that happens for a lot of people. Happened for me as well in the past where I had a really good strategy in demo.

When I start to apply it in live trading, and then results were crap. There are, I think, seven reasons why your results are gonna be different when you trade demo versus live, and I'm going to tell you how to fix it. So, we'll go through those reasons pretty fast, they are really simple. I'll give you examples for each. So that's you're able to check for yourself, what's happening and how to correct this in the future. And I think it's going to be pretty huge if you do it properly.

So the very first reason why the result in live are different than demo, is simply because the fact that the market environment might be different. So, what you trade and the results of your strategy depends a lot on how the market behaves. What is the context in the market? If you try that works well in one environment, and then the environment change, then it's not going to work too well. And that's what people that trade like really well in trend. In demo for example, and go into live and it's a seller's market are going to get crushed. So, you wanna be very careful and you want to be aware when your schedule works the best. Is this in a trending market? Is this when it's sideways? Is it when it's like high volatility or low volatility? If you can figure this out, then your results are going to be better of course. Because you know exactly what to expect and when would be a good time to stop trading and go back a little bit, stop trading, and we can go more full in and take more trades. So, that's the very first thing. Little bit complex to understand sometimes if you're really new to it, but can make a big, big difference.

The second thing I see people make wrong all the time, is that they don't concentrate on how many trades they took to test their strategy in demo, or in live. So, they might be taking 10 trades or 20 trades demo, and they expect these trade to be the same thing in live. They expect that the results are going to be the same. They might have a really high one rate, or just an average one. But 10 trades, 20 trades or even like 50 trades, it's not enough to determine a strategy and it's expectancy. You gotta do more work than that. It's like if you took like 20 people on this earth and then said that all the rest of the people are the same. It doesn't really work. You gotta be way more diligent. And that goes with taking maybe 100 trades demo. And 100 trade live to be able to compare the results. If you take 100 trade demo and then only like 10 live then don't expect the same result. Expect that it's gonna be worse, or maybe better. It's gonna vary a lot. But you wanna think it's the number of trades, which it can be a high number to compare your results. And that's gonna make it easier to be able to compare. So that's the number two, it's pretty important.

Now, the third thing to look at is what you have done over optimization. Which is something that people do lots of times is they find a way to trade, but then they over-optimize the market. They like try to fit in and get the best results ever in the market. They're going to end up with a really really good one win rate or really good profit in demo. But when it comes to the real market and trading it live, it won't work because it's only optimized to past data. It's not to the over-all market. So you wanna be careful about not going too like precise and too optimize to past data. And you wanna be able to tell the reason why that strategy works in the market today overall, not just in the past. If you don't over-optimize, then you're more likely to result that you had in demo and live as well after. So that's something you could think about.

The fourth thing to check for yourself is how to execution? Is it good, is it bad? A lot of people are going to trade really well in demo, but when it comes to trading live, they make mistakes. Or they take the wrong trades. Or they don't respect ? The plan fully. And that's going to impact your result quite a bit. So, you want to be able to make sure that your execution when trading live, is the exact same thing as demo. It's not different, it's like the same thing, you do the same trades. You follow the same plan, with the same rules, no change. And, it's really rare its gonna be 100% like super compliant and perfect. We might make mistake, but you want to figure out what is the cost of those mistakes? Is it big, is it normal, like what does it do to your profit? Or to your result? Or to your win Rate? Is it a big deal, or not? And from there, you can know what you need to work on as a trader. But that's something pretty big to think about.

The fifth thing to check is whether you've done some bad backtesting. Now, some people in backtests completely screw up. They take trades that would not take live or they cheat the results off a backtest before taking the trade, and that doesn't seem to work very well. Like you can make mistakes backtesting that are going to cost you a lot live. Because you think your strategy is going to work pretty well but it ends up not working well at all. And that's the thing that's gonna be very costly and the results will be very different. So ensure that your backtesting or your demo trading has been done right and your results will be more likely to be the same when you trade live after that. Something to be very careful about, of course.

The sixth thing is something I've been very guilty of which is missing trades. So what if you've done something in demo, or in backtest and then your results were like really good because you traded like all the stuff you could find. But what if you only take trades during the day when you trade live? It means that maybe half the trades don't take them. And your results will be different. Or what if like you have a job and you take only a quarter of the trades you took in backtests because you have a full time job and you cannot take all the trades. So you gotta be careful about that and the answer here might be to have a robot taking the trades for you or it might just be that you wanna test in backtest your real hours of trading. What your gonna trade when you trade live. And, that's gonna make the results more similar. Maybe especially when you trade now in your live trading it's like really quiet and there's no set up at all. Or there's too few set up, or the set up you find are mostly losers. That can be very different, so you wanna be careful about the fact that the trades you take in backtests or in demo, are the same you take in real, in-life trading. Okay, like the same time, the same hours and that's gonna increase your chances of having success in live trading after.

Finally, the seventh thing is like if you've checked all these things and you've done no mistakes, which would be unlikely, but let's say it happens. Then maybe just want to trade live in a normal drawdown, maybe it's just a normal losing pattern of your strategy that could happen very well. It happened for me when I started doing my first strategy ever in the market. I had the drawdown from the start. And I knew I wasn't doing things right. So I had this confidence of keeping going. But, if you don't know exactly what the results should be or if you just like get there and you have the drawdown, it could be very bad, it could be very disappointing for you. If that's the case, then you can just keep going. But, you also want to be careful about the fact that you might be looking at your data wrong. And by that, I mean that maybe for some like three month, it's been profitable with your live trading but maybe that for some two weeks, you've been wiping out the profit. And that two weeks is a normal drawdown that you should expect. So you've been kinda forgetting that two month period of profitable trading, for that two week of drawdown. And you wanna be careful about how you look at your stats with that.

So guys, all that makes sense these are like seven ways you can check why your live trading is different than your demo trading. If you have any other or way or any thoughts in this, comment below of course. Here are a few comments to pass to you I appreciate you guys always for leaving comments down below in the comments section. Give a like if you liked it today and I'll catch you back here for another one tomorrow. Ciao.

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My name is Etienne Crete (from Montreal, Canada). I'm a swing Forex trader (who has the chance to travel the world anytime) and help aspiring Forex traders develop a trading method that works for them so they can produce income allowing them to live with more freedom.

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Demo vs. Live Trading: Different Results?