Are Demo Accounts Similar to Live Accounts?
Similar, but not the same. For the most part, practice accounts utilise the same functionality as their live counterparts, although this is by no means a guarantee. While the idea is generally to give trades an understanding of the platform and the basics of spread betting, some brokers build in slight differences to their free and real account versions, making the trading experience within demo account from time to time more restricted than trading for real.
But perhaps the main difference between demo accounts and live accounts is the learning experience they can offer. While most traders would tend to default to a demo account as the main source of their trading education, there really is no substitute for raw experience. Losing £10,000 virtually will never come close to losing £10 of real cash, and the distinction is an important one for helping to shape trading strategy and understanding.
Demo Account vs Real Account
For new traders just starting out in spread betting for the first time, choosing a free demo account can be a great way of getting to grips with the fundamentals. Spread betting really does make more sense in action than in words, and it’s always advisable to sign up for a demo account (invariably free of charge) with a few brokers in order to learn the ropes and get a better understanding of the core practicalities of analysing the markets, choosing a position and executing a trade.
Don’t forget that demo accounts can also be a great way to get a feel for a particular broker and their platform. This can help make it easier to choose a broker later down the line.
However, there are also benefits in trading real money straight away, with some brokers starting from as little as 10p a point. Depending on the platform you choose, your demo account may have restricted functionality in comparison to a live account, and there can really be no substitute for learning mistakes from losing your own money – even if it is just a couple of pounds to start with.
For those just starting their spread betting journey, both a demo account and a live account are must-have short-term considerations.