This is a problem always faced by most of the traders. Especially the new entrants. There could be several reasons why someone might experience profits while trading virtually, but losses in real trading, even when using the same approach with discipline. Here are a few possibilities:
- Emotions: Trading with real money can trigger emotional responses such as fear, greed, and anxiety, which can lead to impulsive decisions and deviations from the trading plan. In contrast, virtual trading does not involve real money, so there is no emotional attachment or fear of loss.
- Market volatility: The real market can be more volatile than a simulated one, which can result in unexpected price movements and market conditions. This can cause losses even when the trading strategy is sound.
- Slippage and liquidity: When trading with real money, the trader may experience slippage or difficulty in executing trades due to lack of liquidity. This can lead to losses that are not present in virtual trading, where trades are executed instantly.
- Overfitting: It is possible that the trading strategy was developed and optimized specifically for the virtual trading environment, and may not perform as well in the real market due to overfitting.
Overall, it is important to approach real trading with discipline and a realistic understanding of the challenges involved. Practicing with a demo account can be helpful, but it is essential to recognize the differences between virtual and real trading and to adjust your strategy accordingly