In Forex trading, because the demo account uses the same market data and the same trading mechanism as the real account, if a strategy can be successful in the demo account trading scenario, it is highly likely to be successful in the real account operation.

Therefore, many investors will use demo accounts to avoid the loss of funds before the strategy matures, and wait for a strategy to be tested several times in the demo account environment and obtain stable returns before starting a real account to make profits.

But investors often find that the win rate in the demo account is good, but the real account begins to lose money. This is because there are many differences between a demo account and a real account, which is also the reason for the difference in returns between a demo account and a real account, and investors need to be aware of these differences.

The order will be rejected

The trading environment of the simulated account is a controlled environment, very stable, in such a trading environment investors will not receive repeated quotes, and in the real trading environment, repeated quotes are inevitable for investors in the transaction.

Duplicate quotation is a common phenomenon in foreign exchange trading. It usually occurs when placing an order, because the price (quote) of a currency pair is changing too fast, or during a period of intense market volatility, a particular price specified by the trader has become unsuitable for trading after being offered to the Forex broker, so the broker will re-quote the trader, which is usually higher than the previous quote.

Therefore, because the simulated environment is very different from the real-time market environment, the trading orders of the simulated account are always completed smoothly, but in the real account, there will be pending orders from time to time.

spread

The spread on demo accounts tends to be smaller, and this difference is even more pronounced if you are trading in real market conditions with a broker that offers a floating spread and is quoted by a liquidity provider.

If you are trading in a real environment with a broker that offers a floating spread, the broker has to pay a fee to get a market quote because the liquidity provider quotes, and the demo account has no trading costs. The stop loss order is always executed perfectly in the simulated environment, but in the live trading scenario there may be a significant slip point and the stop loss order is executed at a higher level.

Transaction cost

An investor's stop-loss order is always executed perfectly in a simulated trading environment, but is sometimes executed at a higher level in a real account.

The main reason for the difference is the data source. A broker has to pay a fee to get a market quote, and there are various additional expenses, such as liquidity provider fees, that can make trading more expensive. With demo accounts costing nothing, Forex brokers don't have to go to the trouble of providing the same data and trading conditions.

Sum up

These are the main differences between demo and real accounts. In general, for investors, demo accounts can help users screen traders and test their strategies. Investors can use demo accounts to try more before the actual operation.

At the same time, here to remind everyone that a platform can conduct a mock account test is basically standard, if you encounter the platform does not have a mock account, it is necessary to be careful to deposit gold, you can search the dealer in the foreign exchange eye for inquiries, to avoid entering the gold black platform.