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Module 3: Trading sessions and orders · Lesson 13 of 13

Practising on a demo account

3 min read

A demo account is a practice trading account funded with virtual money, using live or near-live market prices. It lets you learn a platform and test your ideas without risking real funds.

What a demo account is good for

  • Learning the platform - placing market and pending orders, setting stop-losses and take-profits, and closing trades.
  • Understanding the numbers - seeing how pips, lot sizes, margin and leverage affect your account in practice.
  • Testing a plan - trying out a trading approach consistently over many trades.
  • Avoiding costly mistakes - such as entering 1.00 lot when you meant 0.10.

How to get the most from it

Treat it like real money. The most common error is opening a demo with a huge virtual balance and trading wildly. That builds habits you would not want with real funds.

Example: You plan to open a live account with about $1,000. Set your demo balance close to that figure, rather than the default $100,000. If you risk 1% per trade, each trade should risk about $10. With a 20-pip stop on EUR/USD, that suggests roughly 0.05 lots (about $0.50 per pip). (Figures are illustrative.)

Other good habits:

  1. Keep a trading journal noting why you entered, where your stop and target were, and the result.
  2. Review your journal weekly to spot patterns in your wins and losses.
  3. Practise for a meaningful number of trades, not just a few days.
  4. Try different sessions to see how spreads and volatility change.

What a demo cannot teach you

Demo results are not a reliable preview of live results. On a demo:

  • There is no real fear or greed, which strongly affect decisions with real money.
  • Fills may be smoother, with less slippage than a live account sees.
  • Spreads and conditions may differ from the live account.

Many traders find it helpful to move to a live account gradually, starting with small sizes such as micro lots.

Risk: Doing well on a demo does not mean you will profit when trading for real. Only trade money you can afford to lose.

Key takeaways

  • A demo account uses virtual money at live prices to practise safely.
  • Use a realistic balance and position sizes to build good habits.
  • Keep a journal and review your trades.
  • Demo results can differ from live trading, mainly due to emotions and execution.

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Educational content only — not investment advice. Leveraged trading carries a high risk of loss.