13 April, 2016
If you have tried using demo account and have been using a live account, you would know that executing is much easier on a forex demo account. On the other hand, when you begin trading the live forex accounts, you might encounter some unfiled pending orders. This is because the environment a trader is trading in is hugely different from the real time markets.
Here are some differences between a Demo Account and a Live Account:
Spreads. They are normally tighter when using a demo account. This is more obvious if you were trading with a variable spread broker where the market conditions and the liquidity providers declare the spreads.
Stop loss order. This execution is always executed perfectly in a demo, but with a real trading account, traders’ often concern is that the broker executed their stop loss orders at a higher level, risking a bit more than what the trader expected.
Being re-quoted. In a demo account, you are never re-quoted since it is a more controlled environment, but with a live account, re-quotes are something that traders have to deal with and there are no ways around it.
Should you still use a Demo Account before opening a Live Account?
Definitely! Why? Demo trading accounts is a risk free trading environment for the traders, and it is specifically very useful for beginners in forex trading as it helps to get accustomed the market. It shows your way to the brokerage firm and the stock markets, and is used to test the trading conditions provided by the broker.
However, take note that all profits earned in a demo account are only virtual money. There is no way you can withdraw it despite the number of amount.
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