New traders who want to start trading often choose a demo account to learn the trading basics. And it totally makes sense – a demo account is a convenient way to try all the trading platform features with no risk of losing money. For most traders. it’s even recommended not to switch to real account unless they can achieve consistent results on the demo account. But even then you need to understand the differences in trading on demo and real account in order to prepare to move your trading to a real account.
Understand the risks
It’s easy to feel like you own the game when the demo account deals show steady wins. But don’t let that fool you into thinking that the same is surely going to happen with the real account. Trading on the demo account doesn't put you under as much emotional and psychological stress as trading on the real account does. Let's be honest, you rarely worry about losing your entire demo balance because it can be easily replenished back to 10.000 USD. So be smart, remember that you can lose real money and plan your trading strategy accordingly. Another useful tip is to replicate the real trading conditions as much as possible on the demo account.
Know the psychological difference
Trading is always a rollercoaster of emotions, especially so for beginners – you feel excited and nervous at the same time. But it’s important to understand that losing deals can and will happen and to accept that. Once you decided on your trading strategy, stick to it and try to not get instantly discouraged when a deal goes south. Don’t let one misfortune cloud your judgment and lead to irrational decisions you are going to regret later. However, if the trading strategy you tested on the demo account doesn’t seem to work on a real one – tweak it instead of blindly replicating it again and again.
Once you decided on your trading strategy, stick to it.
Be ready for market
The market is a creature of a volatile nature – the market conditions can change many times throughout a day. Find the conditions you can feel comfortable in: for different traders, it can either be a slow market or a period of high volatility. And nonetheless, be ready for anything, keep your mind on the prize and don’t make hasty decisions. If something feels off, step back, invest a smaller amount than you planned initially and let the market show the result. After all, patience is one of the key trading virtues – over time, you will get a better understanding of the market and will achieve more consistent gains. And remember that no matter how much time you spend trading on a demo account, you will not know if you are ready for the live trading until you start trading on a real account with real money – a trading strategy is only as good as its execution.
You will not know if you are ready for the live trading until you start trading on a real account.
To sum up, let’s formalize the reasons why you should choose a demo or real money account.
Reasons to choose a demo account:
- No risk of losing real money.
- Getting to know the trading platform and its main features.
- Developing and testing trading strategies.
- Learning to manage emotions.
Reasons to choose real account:
- Earning real money.
- Getting live market experience.
- Building passive income from trading.
Made your choice? Register an account with a safe and regulated broker for free, no credit card or deposit required.
Risk warning: Financial products offered by IQ Option include CFDs. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.