It is often said that practice makes a man perfect, but never has it been said how much practice and what kind of practice will make the man perfect. And the same thing goes with forex trading. When you learn a new forex trading strategy you first need to try it on a demo account to see if it really works and then shift to the live trading account. But how much time should one spend on a demo account? Well, there is no perfect answer to it.

Spending too much or too little time both has its cons. And also the time required depends upon the individual to individual. So, let us first understand this, and then I will tell you when you should shift to a live account.

How much time of practice will it take for a football player to play in professional games, or how much practice is enough for a musician to perform in front of an audience?

There is no definite answer to such questions.

I have come across a Ted talk once in which the speaker said that to become completely proficient at a thing, one needs to practice for at least 10,000 hours. But the question that arises here is that does everyone have that many hours to dedicate to practising? What I want to infer from all this is that no other than the trader himself can give an answer to this question. Let us consider two traders ben and Patrick.

Ben is intending to trade forex full time and does not have any other work commitments while Patrick has a job and wants to trade forex part-time. Both open accounts with brokers and trade on the demo account for a while before going live. Ben has lots of time in the day to dedicate to learning and practising on the demo account as compared to Patrick that has a limited time for this purpose, hence it might take a long time for Patrick to start a live account. To sum it up, whether one is ready to move on to live trading from demo trading is completely subjective. The trader will try out the various setups and strategies and will test out the broker’s trading platform in order to become accustomed to it.

Once the trader sees an improvement in his demo trading, he can always begin trading on the live account. In case the trader is of the opinion that he can still improve in some aspects of trading, he can spend a bit more time on the demo account before going to the live account. Now spending too much or too little time has its adverse effects. Like lets us suppose that Ben decided to give 5-10 days for demo trading before he shifts to a live account. The problem here will be that he won’t be accustomed to the different market situations as he just started testing the new strategy on a demo account.

He won’t be able to layout rules and a proper trading plan as he has not come across different trading conditions in so little time. So, when he shifts to a live account any new market conditions may cause him trouble. Now, let us suppose Patrick decided to spend 2-3 months on demo trading. So, during his time in a demo account, he is bound to develop different negative habits that will ruin his trading. Like, he won’t be witnessing any emotions as it’s just dummy cash he is trading for.

But in a live account, a single loss can cause overwhelming emotions. So he won’t be able to manage those emotions while trading live accounts. Furthermore, He will start risking recklessly, after all, it is just a demo account. And a loss won’t hurt much but the winner will probably make him overconfident. And when he does this for too long he will develop a bad habit of risking more than he should.

I still remember in my early trading days I happen to demo trade for too long, and during that time I developed a habit of not using a stop loss. This habit of not using a stop loss was so much ingrained in my mind that even while using a live account I kept on doing the same mistake.

And as a result of that, I blew up a couple of accounts before I could finally get rid of that habit. It is of utmost importance to understand that it is quite tough to unlearn negative behaviours or negative habits. And spending too much time on a demo account is more likely to develop such habits in you.

So if spending too much or too little time both are bad then what should someone do? Well, the right way is to set goals.

Set a goal and try to achieve the same goal twice or thrice with proper risk management. And only after you achieve that goal shift to a live account. Like when I test a new trading strategy, I set a goal of 20 to 30%.

Like if I am able to make 20 to 30% of my account at least twice by following a proper risk management plan. Only then do I use that strategy in my live trading. This makes sure that I am spending perfect time on the demo account to see if the strategy works plus it makes sure that I am getting used to it.