Basics
Demo account
A free broker account funded with virtual money that runs on live market prices, with the same platform, spreads and order types as a real account.
Also called: demo
In practice
You open a demo funded with $1,000 of virtual money — deliberately the same size you intend to deposit, not the $100,000 default — and trade one breakout plan on EUR/USD and gold for six weeks. Same session (the London open), same 0.01–0.02 lots, same 20-pip stop, same journal line after every trade. After 50 trades you have numbers instead of opinions: 22 winners, 28 losers, average winner 1.8R, average loser 1.0R, and a three-trade losing streak in week four that you sat through without changing the rules. You also learn things no article can teach: where the stop-loss field sits in the terminal, how far gold's spread widens in the minute before US CPI, and that you quietly move stops when a trade goes against you.
Why it matters for traders
A demo turns a strategy from an idea into a measurable record. It answers the two questions that decide whether a deposit makes sense: does this plan earn over a sample of trades, and can you actually follow your own rules while it is losing? Test on the account type you will really use, because a scalping edge that survives a raw-spread demo dies quickly on a standard account with a wider spread. The honest limit is emotional — virtual money carries no fear, so a demo win rate is an optimistic ceiling, not a forecast. Graduate only after a fixed 50-trade sample taken with the sizing you would trade live, then start small and expect the same strategy to run slightly worse while you adjust to real risk.
Common pitfall
The pitfall is treating demo like a video game: over-trading, using huge lots, and ignoring costs because the money isn't real. Demo builds unrealistic habits that collapse the moment real fear appears. Trade the demo exactly as you will the live account — same sizing, same pairs, same rules — and graduate only after a full 50-trade sample proves an edge. A demo used recklessly teaches bad habits more reliably than it teaches skill.
Lessons that use this term
- Demo account vs live account
Why every beginner should start on demo — and when to switch.
Related tips
Related terms
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