Major Differences Between Demo Account And Real Account
A Demo is type of an account that is offered by Brokers and certain platforms which gives room to a trader to experiment on the market and test his skills, methods and strategies, they are usually found on foreign exchanges.
In a live account, you get to trade with real money that you would have deposited via a broker, your profits/losses are for real. During live account trading you will notice that you will be trading in a very different environment.
Differences between a demo and a live account
Real time market execution
In a demo account its just an assimilation of what is in the real trading world, traders do not have to deal with counterparts or broker liquidity In that way, orders made in demo accounts are usually executed in real time its faster one click one go. This is not the case when it comes to real trading accounts, retail traders are competing with thousands of other traders who want to make money. In that case execution can be slow depending upon market conditions and your Forex broker’s operations.
In demo accounts there is no liquidity problems and Brokers do not normally requote prices. However, live trading answers to real counterparties and if you want to sell a position, there must be a buyer. When liquidity is tight brokers are forced to requote prices.
Differences in spreads
Demo accounts are designed to follow exchange rates available on real accounts, but sometimes they fail to do so. The price-feed of a demo account and a real account can be quite different, bid and ask price to be particular. While spreads in real trading accounts fluctuate depending on the interaction between buyers and sellers, they’re often fixed in demo accounts.
Most traders have noted that there is a huge difference between trading successfully in a demo account and making the same success in a real account. Though the prices can be almost the same and the conditions almost similar, the psychological risk of losing real money in live accounts changes everything as far as strategy and operations.
Executing stop loss orders
Real accounts can experience problems executing stop loss orders as sometimes prices available will not match the prices traders want in fast-moving markets. That does not happen in demo accounts as it is a controlled environment