A demo account lets you trade a broker's platform with virtual money and near-live prices. A live account does the same with real money and real fills. On screen they are almost identical, and that is the trap: people test a strategy on demo, see a tidy equity curve, fund a live account, and then watch the same system underperform. The gap between the two is real and largely predictable.
What it is
A demo account is a simulator. The prices are usually the broker's real feed, but your orders never reach the market — the platform fills them against its own model of what should happen. A live account routes real orders to real liquidity, where your fill depends on what price is actually available at that instant and how much size is behind it.
Why they differ
Fills and slippage. On demo, a market order tends to fill at the price you clicked. Live, the price can move in the moment between click and fill, especially in fast markets. That difference — slippage — is often modelled generously on demo, or not at all.
Spread and execution. Some demo servers quote tighter spreads, requote less, and never reject an order. A live account can widen spreads at news, requote, or fill you partially.
Emotion. Virtual money does not hurt to lose. The same £200 drawdown you shrugged off on demo can push you to close early, move a stop, or double down when it is your own money at stake. Most demo-to-live decay is not the platform — it is the person.
If a strategy only works on demo, it does not work. Demo is where you learn the platform and confirm an EA runs without errors — not where you prove an edge.
A worked example
An EA is tested on a demo account and returns 6% in a month on a £10,000 balance — £600. Moved live, three things bite. Average slippage of half a pip across its trades costs roughly £180 over the month. A slightly wider live spread adds another £120. And a nervous first fortnight, where you switch the EA off during a normal drawdown, costs a further £150 in missed recovery.
Same strategy, same month: £600 on demo becomes about £150 live. Nothing broke. The demo simply left out the frictions.
How to bridge the gap
- Fund a small live account rather than a big demo. £500 of real money teaches more than £50,000 of pretend money.
- Compare like for like: run the strategy on demo and live in parallel for a few weeks and measure the difference in fills and spread.
- Judge an EA on live results only. Treat the demo figure as a ceiling you will not reach.
- Size your risk for the live version, not the demo one.
The Karnek note
Karnek shows demo and live accounts side by side, each labelled for what it is, so a demo curve is never mistaken for a live one. It reads both straight from the terminal and can never trade either.
Written and reviewed by the Karnek Research team. Last updated August 2026.
Educational content only - not financial advice. Past performance does not predict future results. Trading carries significant risk.