Demo trading vs Live trading

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One advantage for forex traders is that they can practice trading on a demo account. With a demo trading account, you can test out your trading methods without worrying about the repercussions in real life.

On the other hand, when using a live trading account, you are exploring the markets and placing trades that have the potential to result in real earnings or losses.

Professionals and novices alike can use a demo account. Professionals use it to test new trading techniques, while beginners use it to get used to the forex trading environment.

Let's examine some of the most significant differences between demo trading and live trading and determine how to get started.

What is the Difference between Demo Trading and Live Trading?

What is a Demo Trading Account?

A broker provides you with a demo trading account so that you can practice forex trading. It provides you with access to genuine trading environments and real-life trading scenarios. The platform finances your virtual funds, allowing you to practice trading without risking any of your actual money.

Practice is the only concept underlying the demo account. You cannot take your demo trading profits with you. On the other hand, your account balance remains unaffected by any losses you incur in a demo account. It poses no risk at all.

The following are some advantages to trading forex with a demo account:

With real-time pricing, indicators, and all the features of a live account, a demo account offers a realistic trading environment without putting your hard-earned money at risk.

You can make orders, hone your trading techniques, become acquainted with the broker's trading platform, and gain first-hand knowledge of the volatile financial markets. Even seasoned traders use demo accounts to refine their tactics.

When you first start trading, demo accounts are a terrific way to get your feet wet. Because they use virtual money, you cannot withdraw any winnings, but you also cannot lose any money.

It's acceptable to begin with a forex demo account; that's where all the pros started honing their craft and gaining the knowledge necessary to become successful traders.

In the end, a demo account serves as a teaching aid. It provides knowledge that is impossible to gain from reading or listening to mentors or other traders. Using a demo trading account, a trader can go from the theoretical to the real trading environment.

Since most novice Forex traders lose money on their first live account, this hands-on training is quite beneficial. This is typically the result of their inability to acquire the knowledge, discipline, and trading mindset required to successfully trade on a live trading account. For this reason, before using real money to trade, experts advise doing 50–75 virtual trades on your trial account.

Additionally, you can test a certain trading technique on a demo account before implementing it on a live account. In actuality, a lot of traders test their algorithmic automated trading methods on trial accounts before putting them into practice in a live trading environment.

Generally speaking, you should never consider trading on a live account with real money until you have established a reliable, lucrative trading method. Instead, you should use a demo account! If necessary, choose a forex broker that offers an unlimited demo account so you can use it for as long as you need to.

What is a Live Account?

You could create your own trading style and technique by using demo trading to better understand the forex market's dynamics. However, you eventually want to stop trading on a demo account. It's just not possible to earn real money on it. Consequently, upgrading to a live account is the last step.

On a live account, you trade forex with your own money. In this case, each victory is worth real money to you, and every setback costs you.

The following are the main distinctions between a real account and a demo account:

The main difference between a live account and a demo is that live accounts involve real money. On a live account, you can take your profit out whenever you want, but on a demo account, you cannot.

Trading psychology is another element that significantly distinguishes the live account from the demo account. When comparing the two types of platforms, a significant portion of Forex traders assert that emotion is the primary element that is impossible to replicate. To be honest, don't be shocked if your demo account starts bringing in a tonne of money right away. Trading is essentially a mental game.

Slippages happen in live accounts, but not in demo accounts with multiple brokers. Because of this, losing money on a live account is more likely than it is on a trading account.

To provide traders with ideal learning conditions, several brokers minimise their spreads on demo accounts. However, since the brokers profit from the spreads, the spreads on live accounts are harsh.

When it comes to imposing position size limitations on demo accounts, many brokers are lax. On occasion, they let you execute deals that are too big for you to execute on a live account

Pros and cons of a demo account


You will not lose real money if you make losses due to wrong decisions

If traders have access to a demo account, they learn how to use software for trading real money in an easy mood, where pressing incorrect buttons wouldn’t result in a financial catastrophe

No stress on a demo account since real trading causes emotions of greed and fear

Working on a demo account allows you to identify all your shortcomings in market analysis, trading decisions and strategy

Trading papers from several weeks to a month allows to collects useful statistical data about a new strategy and market approach

Making a number of complex decisions, which are rewarded with a hypothetical profit, has a big significance for building confidence, so that a beginner starts to feel that he could do the same when real money is at stake


Commissions. Real account traders have a lot of expenditures on the part of the broker and exchange. Not all demo accounts take into consideration this expenditure item, which increases significantly in real trading

Beginners may get a feeling of false confidence in their success. The matter is that, in the real market, an order will be executed depending on the offsetting order availability

Demo traders are inclined to idealise their results, justifying themselves or inventing the reasons why real trading will be better than the demo one

Demo trading doesn’t cause real emotions, which you experience when you make a profit or loss on your real account. In the real world, many traders reduce profit and allow losses to grow due to the absence of the market discipline. As a result, a trader under pressure could make such decisions, which he didn’t allow himself to make on the demo account

Pros and cons of a live account


Using a live account provides traders with a real trading experience, allowing them to understand the dynamics of the forex market. It helps traders develop crucial skills such as risk management, trade execution, and emotional control.

Forex trading offers significant profit potential due to its high liquidity and leverage. With a live account, traders can take advantage of these opportunities to generate substantial returns on their investments.

With a live account, traders have access to real-time market data, including price quotes, charts, and news updates. This information is essential for making informed trading decisions and identifying profitable opportunities.

Trading with real money involves emotions and psychological factors that cannot be replicated in a demo account. Using a live account helps traders develop the mental discipline required to navigate the highs and lows of the market.

Most forex brokers provide educational resources, webinars, and tutorials to help traders improve their skills. By using a live account, traders can make the most of these resources and enhance their knowledge and understanding of the forex market.


Trading with real money can induce significant emotional stress, especially for novice traders. Fear, greed, and impatience can cloud judgment and lead to irrational decision-making.

Forex brokers charge various fees and commissions for trading on live accounts. These costs can eat into trading profits and impact overall returns. Traders should carefully consider these costs and choose a broker that offers competitive pricing structures.

The forex market is subject to high volatility, especially during significant economic events or news releases. Trading with a live account exposes traders to this volatility, which can result in rapid price movements and unexpected losses if not managed properly.

The most significant drawback of using a live account is the potential for financial loss. Forex trading is inherently risky, and traders can lose their entire investment if they make poor trading decisions or fail to implement proper risk management strategies.

Forex trading is complex and requires a certain level of understanding to be successful. Using a live account without sufficient knowledge and practice can lead to losses. It is essential for traders to invest time in learning and practicing their skills before trading with real money.

The bottom line is to start with a demo account and learn how to trade the forex markets safely first. Then, once you have developed your own strategy and trading plan, open a live account with a reputable forex broker. That’s the right way to start your forex trading journey.

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