Demo account
Family V · Platforms
Not to be confused with forex account, cent account, ecn account.
Demo account is a training environment provided by a broker or platform that mirrors live trading with virtual funds. It uses real market prices but no actual capital is at risk, and any profits or losses are notional. Access, expiry and available instruments vary by provider.
How it works
A demo account is funded with a virtual balance chosen by the user or preset by the broker. Orders are executed against the same price feed as live accounts, but fills are simulated. Because no real money changes hands, the psychological pressure of live trading is absent.
Key characteristics:
- Virtual funds only; no deposits or withdrawals.
- Prices and spreads may differ slightly from live conditions.
- Accounts may expire after a set period of inactivity, depending on the provider.
- Not all instruments or order types may be available.
Worked example
A trader opens a demo account with a virtual balance of $10,000 and buys 100 shares of a stock at $50. The position size is $5,000. The price rises to $55, and the trader closes the position.
The $500 gain is virtual and cannot be withdrawn. It demonstrates the mechanics of the trade but not the real-world outcome.
Limitations
Demo accounts are useful for learning platform navigation and testing strategies, but they do not replicate live execution factors such as slippage, requotes, or emotional decision-making. Traders should not assume that demo performance will translate directly to live results.
Often confused with
- forex account
- A forex account is a live trading account specifically for currency pairs, whereas a demo account uses virtual funds and may cover multiple asset classes; the visible sign is whether real money is deposited.
- cent account
- A cent account is a live account denominated in cents, allowing very small real-money positions, while a demo account uses virtual funds and no real currency; the visible sign is the account balance showing cents rather than a virtual figure.
- ecn account
- An ECN account is a live account that routes orders directly to liquidity providers, often with variable spreads and commissions, whereas a demo account simulates execution without real market impact; the visible sign is the presence of real commissions and live order routing.