Why there are performance differences between Demo and Live Accounts? - Forex Trading

Many of us are asking why my trading robot does it that well in demo and it performs weak on live accounts while the prices are the same.

I'll point out some of the factors that may contribute to this:

On demo accounts all the trades are immediately filled on the demo server, so there can never be slippage. 

On live trading all the orders are sent to the markets to be filled, and then they are subjected to network latencies, amount of liquidity available from the liquidity providers, and market other conditions.

This means it is possible that on live trading the orders can have positive or negative slippage.

Also, sometimes, the demo account is a "Classic" one and the live account is an "ECN" one. The difference between 2 types of accounts is: the classic account has fixed spreads. It is supposed that the spread doesn't change over night or during the news. ECN accounts are constantly changing their spread. The spreads for the Classic accounts are bigger than the ECN ones, but ECN's spreads can get as big as the classic account's spreads.

These differences can make your position on your live acocunt to be filled earlier or later than demo. That's why the demos does it great and the live not that great.

I suggest that when you test an EA in a demo environment and it works well, before going live, please make sure you are trading forex in the exact same conditions e.g. you run the demo and live account from the same computer, maybe consider a good vps service with low latency, make sure your broker has multi-liquidity providers, if the demo is a Classic account, then make sure the Live account is a Classic too, etc. Once you are sure you are meeting the same conditions (the ones that you can control of course), you can go live. But once you go live, be conservative, use the smallest lots available on your account. 

We all know that the target here is to preserve our capital before even trying to make profit.

I hope it helps.