Differences Between Live and Demo
1. Let's start with the most important difference - no risk on a demo account. The factor seems insignificant. However, emotions cause the main mistakes in real money trading. Due to the lack of fear of losing funds, trading on a demo account gives you a pleasant enjoyable experience in a positive environment. You can focus and make informed trading decisions.
Real money trading takes place in a more intense atmosphere. Emotions might lead to unnecessary trading mistakes:
- Trading out of revenge
- Trader’s block caused by fear of losing money
- Overtrading, etc.
Trading on a demo account has no real consequences. Traders often deviate from a set plan or ignore it altogether. As a result, you may get the false impression that you can make money in Forex without discipline or a trading system. Don't let the demo account fool you, as real trading is getting more and more difficult.
2. On a demo account, you will not encounter requotes. Your trades will be opened at the price you stated. In real trading, thousands of traders submit orders at the same time and they are executed in order. In these fractions of a second, the market price can change and you will receive a requote. This doesn’t happen on the demo server.
3. The same can be said for slippage. A much smaller number of people trade on the demo server. Liquidity is much higher here. Any trade you make will be executed at your stated price.
4. Often the spread on demo and live accounts is different. This usually happens on accounts with a floating spread. Therefore, remember that the cost of trading on demo and live accounts may differ.
5. On demo accounts, your Stop Loss and Take Profit orders will always be executed at the stated price. For the reasons described above, slippage is more common in real trading. That is why demo trading requires less attention. A live account requires at least some monitoring. To do this, you can install a mobile trading terminal and use trading robots that will notify you when the chart hits the price you need.
Is It Worth Trading Demo
This is a perfectly reasonable question, given the listed differences. And the answer is yes, it's worth it. And here’s why:
- While learning all the Forex trading nuances, you will inevitably lose money. Let it be virtual rather than real.
- Two months on the demo server will introduce you to most of the market situations that you may encounter in real trading. You will know how to trade flat and in high volatility conditions, what candlestick patterns look like, how major trading figures are formed, etc.
- The demo account is perfect for testing a new trading system, robot or indicator. You will be able to try and adjust the new system without risking real money.
A demo account can create a false impression of real Forex trading. However, it’s an indispensable tool in the work of any trader, especially a beginner. Spend a couple of months trading on the demo server, but keep in mind all the differences described above so that the live account doesn't catch you by surprise. Ready to try demo?