It should be simple. You did well on the demo account—great in fact—but as soon as you opened a live account you started to lose money. "What happened?" This is the reality for most new traders. Some experience the capital draw-downs right away, for others it takes a while, but almost every day trader has a transition period between demo trading and live trading where they seem to lose their way. If you're experiencing this, here are some potential reasons why, and how to get back to your winning ways.
Give yourself a break. What you're going through is normal. There is more pressure when real money is on the line; there was no pressure when you were demo trading. Having a few weeks, or even a few months, of "bumpy" live trading, is common and normal. This is just another step in becoming a successful trader. If it was easy, everyone could do it, and of course, that is not the case. Only those who persevere through the adversity get to become profitable day traders.
Take some comfort in knowing that every successful trader who came before you went through a similar transition phase, and while it was difficult, they made it through.
Market Conditions Change
The transition from demo to live trading becomes even more difficult if the demo trading period was relatively brief. Market conditions constantly change, so only spending a month or two in a demo account means the trader isn't likely prepared to handle the various conditions the markets can throw at them.
Consider the trader who's trading a demo account during a very volatile period. They get used to the big moves and begin to expect them. Their strategy is built around capturing big price swings. The strategy performs well in the demo account, in the volatile conditions, so the trader opens a live account. Volatility is dropping, but the trader continues to assume every trade will result in a big price swing. Those moves never come, and the trader's account is whittled away by losses. The trader failed to adapt. The market is showing a side of itself the trader isn't prepared for.
The same situation could happen to a trader who demo trades in slow market conditions, but when they open their live account conditions are volatile. Since the trader hasn't practiced in this environment, they are unlikely to repeat their demo trading success in the live market.
If you're struggling after going live, consider if you've prepared yourself for all types of market conditions. Day traders need to trade—and know when not to trade (based on their trading plan)—in trending markets, sideways markets, whip-sawing markets, volatile markets, and slow moving markets. If you don't know how to trade (or when you shouldn't trade) in all these conditions, then live trading should be put on hold until you do.
The Psychological Element
There's one major difference between demo trading and live trading: fear. Anxiety or fear when trading changes how we view the market. In the demo account, you likely took every trading signal you could. In live trading, though many traders do the opposite; they start to question each trade. Afraid to lose money, they talk themselves out of many trades, effectively randomizing their trading results, relegating themselves to the large contingent of losing traders.
Being a successful live trader requires completely embracing losing trades. Once you accept—on an ingrained belief level—that losses will happen, then the fear subsides. The only way to get over the fear of losing is to lose, and realize that even though you have losing trades you can still be a profitable trader overall. When first trading live, trade the smallest position size possible. In this way, the loss on each trade is so small that it shouldn't be a concern. Using the small position you aren't clouded by anxiety. Slowly, increase your position size as you become more comfortable, eventually rising up to 1% of your account on each trade.
Using this approach, you start out risking so little that you don't have anxiety, but as you win and lose you're building an internal belief structure that you can be profitable overall, even if a good portion of your trades are losers.
Moving from demo trading to live day trading should be simple, yet usually, it's a struggle. Make sure you've practiced and have a plan for all market conditions. When trading a live account, start out with the smallest position size possible. This may seem like a step backward after trading larger positions in the demo account, but you can't afford to let anxiety affect your trading decisions. Over time you'll be able to increase your position size, without inducing anxiety. Work on these factors and your transition to live trading will likely be much smoother.