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Demo VS Real

Discussion in 'Beginners Bootcamp' started by emileneth, Mar 31, 2009.

  1. emileneth

    emileneth Recruit

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    What's the difference? Can u help me take some light on it?

    There's a lot of writing on "differences" between a demo account and a real one, if there is ANY difference in a broker (except for technical issues) then I would immediately think that the broker is a scam or semi-scam

    i would define that as
    semi-scam: broker with demo accounts performing better than the real ones, it haves the fact that you don't obtain what they promised/promoted.

    As I can see there are cases in wich the trader, without the fear of real loss, operates the account with high risks and in consecuence higher ROI and a different conception on how a demo account regulary performs

    What's your experiences on this differences across the brokers?
     
    #1 emileneth, Mar 31, 2009
    Last edited: Mar 31, 2009
  2. Pharaoh

    Pharaoh Colonel

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    There are several differences.

    First, demo accounts usually run on a separate server. That alone can cause some small differences even if everything else is identical.

    Second (and most important), since there is no real trade taking place, liquidity is not an issue. It will execute an order for 10 lots the same as an order for 1 microlot. In the real world, your order will sometimes be competing with other orders to get the same price. This means that real requotes and slippage will be greater on a real account. I have seen slipppage and requotes on demo servers, but never as extensive as on live accounts.

    As a consequence of no real liquidity issues, spreads will not widen as much (or at all) during times of very high or very low trade volume on a demo account compared to a real account.
     
  3. Brendan Wood

    Brendan Wood Recruit

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    If the market is so big, and trillions per day is traded, why could there be a liquidity problem when doing normal trades? I am new and unsure of alot of terms, but your glossary says something with liquidity can be bought or sold without having much effect on the market.. Isn't that what everyone says? ..that the forex market is so large even massive amounts traded even by large banks will not effect the market?
    Is it the first in best dressed with regards to orders? I was under the assumption that since the market is so large you an trade any amount you like.. but are you saying that hypothetically if i did a billion dollar trade it would be unlikely to go through?
     
  4. Pharaoh

    Pharaoh Colonel

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    Trillions move, but a lot of that is shifts between banks. Only a true ECN broker can tap into a significant fraction of that liquidity. Most brokers are really only tied into a small fraction of one or two other liquidity providers.
     

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