Demo trading has a real limitation, and it's not about realism of price feeds or execution — it's psychological. Because nothing is actually at stake, a loss on demo simply doesn't feel like a loss. You can run a perfect demo account for months and still fall apart the moment real money enters the picture, because the emotional response you need to learn to manage was never present in the first place.
Why Demo Doesn't Teach What You Think It Does
Demo Trading
- No genuine loss aversion — losses don't register emotionally
- Easy to take oversized "confident" positions with no real consequence
- Discipline under demo conditions doesn't reliably transfer to real conditions
- You can develop bad habits (revenge trading, ignoring stops) with zero real feedback
Real, Small Stakes
- Genuine loss aversion, even at tiny stakes — the emotion is real
- You feel the pull to deviate from your plan, and practise resisting it
- Discipline built here transfers, because the psychology was real throughout
- Maximum downside stays small and clearly bounded while you learn
Keeping Your Downside Bounded
This only works if the risk stays genuinely small and controlled throughout. The goal isn't to accept losses as an expected cost — it's to cap your maximum possible downside during this learning period so it's small enough that you can practise real discipline without meaningful financial consequence.
What "bounded" looks like in practice
With IG, you can trade the DAX from as little as £0.05 per point. A 20-point stop loss at that stake means risking around £1 per trade. Even across many trades, your total exposure stays small and known in advance — because you've defined the ceiling before you start, not discovered it afterwards.
A Framework, Not a Script
Rather than a rigid day-by-day plan, think of this as three phases you move through at your own pace — the timing depends on your own comfort and consistency, not a fixed calendar.
Phase 1: Genuinely Tiny Stakes
Start at the smallest stake your platform allows. The purpose here isn't profit — it's noticing your own emotional response to a real loss, however small, and practising sticking to your plan anyway.
Phase 2: Consistency Check
Before increasing size at all, check whether you're actually following your own rules — correct position sizing, respecting your stop, not moving it under pressure, not revenge trading after a loss. If you're not consistent yet, staying at Phase 1 longer is the right call, not a failure.
Phase 3: Gradual, Rule-Based Scaling
Once you're consistently on-plan, increase size gradually — governed by your Position Sizer output as your account grows, not by how confident you're feeling after a good run.
| Illustrative Example | Stake | Approx. Risk per Trade (20pt stop) |
|---|---|---|
| Phase 1 — starting out | £0.05/point | ~£1 |
| Phase 2 — consistent, small increase | £0.10/point | ~£2 |
| Phase 3 — scaling with account growth | Per Position Sizer | Per your risk % |
Illustrative only — your own stake sizes and pacing should reflect your own account, risk tolerance, and the output of the Position Sizer, not a fixed schedule.
What You're Actually Practising
- Following your stop loss — even when it's uncomfortable to do so
- Correct position sizing — matching your risk % exactly, not rounding up "just this once"
- Not revenge trading — after a loss, sticking to the plan rather than trying to immediately win it back
- Letting winners run — to a genuine target, rather than closing early out of nerves
These are the habits that determine whether a trader survives once real money — and real risk — enters the picture at scale. They're far easier to build now, at small stakes, than to unlearn later.
Practise With a Real, Bounded-Risk Account
Open a free IG account and your first month of the Trader's Edge Formula software — including the Position Sizer — is included, completely free. Already have an account? Start a 7-day trial instead.
Free IG account + first month free, or 7-day trial • £97/month thereafter • Cancel anytime
Risk Warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with IG. Even small stakes carry genuine risk of loss — only ever trade with money you can afford to lose.