Demo accounts: what they teach and where they lie
What a demo account records and what it leaves out
A demo account records your clicks and the arithmetic behind them. When you buy or sell, it shows a position, a running profit or loss, and a balance. The platform buttons work the same way on a live account, so learning where they are is useful. But the demo records only what the software decides to show. It does not record what happens when the market is moving fast and the price you clicked is no longer there.
A live account records something else as well: the price at which your order actually filled. That price can be different from the one on your ticket. The difference is called slippage. A demo rarely shows slippage because it fills you at the price on the screen at the moment of the click. In a live market, the price can move between your click and the broker receiving the order. So the fill you get is often worse than the one you saw.
The demo also leaves out how you feel when the money is real. On a demo, a loss of R200 is just a number. On a live account, that R200 is money you could have spent on something else. The demo cannot teach you how you will react when a loss is real. It can teach you the platform and the sums. It cannot teach you the feeling of losing real money.
Why the price on the ticket is not always the price on the statement
When you place an order, the platform shows a price on the ticket. That is the price you are asking for. The broker then tries to fill it. In a quiet market, the fill is often at that price. In a fast market, the price can move before the broker fills you. The price on the statement is the price you actually got. It can be different from the ticket price.
Some brokers send a requote instead of filling at a worse price. A requote is a new price that you can accept or reject. If you accept, you get the new price. If you reject, the order is not filled. A demo rarely shows requotes. So a demo can make it seem as if every order fills at the price you see. That is not always true on a live account.
The difference between the ticket price and the fill price is measured in pips. On USD/ZAR, one pip is 0.0001. If the ticket shows 18.4100 and the fill is at 18.4120, that is 20 pips. On 0.10 lots, one pip is worth R1.00, so 20 pips is R20.00. That R20.00 is the slippage cost on that trade. A demo would have shown a fill at 18.4100, so it would not show that cost.
Using a demo as a calculator, then moving to live with small size
A demo is best used as a calculator. You can practise the arithmetic: how many pips a price move is, and what that is worth in rand on your lot size. You can also learn where the buttons are and how to place a stop loss. That is honest practice. It does not pretend to be the market. It is a safe place to make mistakes with the sums.
When you move to a live account, start with the smallest size the broker allows. That way, the first real slippage costs a few rand rather than a large amount. If you normally trade 0.10 lots on a demo, try 0.01 lots live. On 0.01 lots, one pip is worth R0.10. So 20 pips of slippage costs R2.00. That is a small price to pay for learning how live fills work.
Do not treat a demo fill as proof of what a live fill will be. The demo is a rehearsal of the platform, not of the market. The market can move quickly, and the fill can be worse than you expect. The goal is to learn the platform and the arithmetic on the demo, then learn the real fills with small money. That way, you learn both without risking a large amount.
18.4100 to 18.4120 — what 20 pips costs on 0.10 lots
| Step | Amount | Note |
|---|---|---|
| Instrument and price | USD/ZAR at 18.4100 | the round-number price used throughout this lesson |
| Position size | 0.10 lots | one tenth of a standard lot; the size the reader chooses |
| Pip size on USD/ZAR | 0.0001 | the fourth decimal place, the usual pip for this pair |
| Value of one pip on 0.10 lots | R1.00 | 0.0001 × 10,000 units = 1 unit of the quote currency, the rand |
| Move in the example | 20 pips | from 18.4100 to 18.4120 |
| Result on the position | R20.00 | 20 pips × R1.00 per pip |
| Demo fill | 18.4100 | the demo fills at the price on the ticket |
| Live fill after slippage | 18.4120 | the market moved 20 pips before the order filled |
| Difference in rand | R20.00 | the same 20 pips, now a cost rather than a gain |
A broker may quote a slightly different pip value, round the fill to its own precision, or add a spread and commission on top. These vary between brokers, so the rand figures here are only the arithmetic from the numbers given.
Doing it once, step by step
Here is a short walkthrough to help you use a demo account honestly and then move to a live account with small size.
- 01
Open a demo account with a broker regulated by the FSCA
Choose a broker that is authorised by the Financial Sector Conduct Authority (FSCA). You can check the FSCA website for a list of approved brokers. Open a demo account, which is free and does not require a deposit. Use the platform to find the order button and the chart.
- 02
Practise placing a trade on USD/ZAR
Find USD/ZAR in the platform. Place a small trade, for example 0.10 lots. Watch how the profit or loss changes as the price moves. Note the price on the ticket and the price you get. On a demo, they are usually the same. That is the first thing to notice.
- 03
Calculate the value of one pip in rand
For USD/ZAR, one pip is 0.0001. On 0.10 lots, one pip is worth R1.00. If the price moves 15 pips in your favour, you make R15.00. If it moves 15 pips against you, you lose R15.00. Do this calculation yourself until it is quick.
- 04
Note the difference between demo and live fills
On a demo, the fill is at the price on the screen. On a live account, the fill can be different. The difference is slippage. It is measured in pips. For example, if the ticket shows 18.4100 and the live fill is 18.4120, that is 20 pips. On 0.10 lots, that is R20.00.
- 05
Move to a live account with the smallest size
When you feel ready, open a live account with the same broker. Deposit a small amount using EFT, instant EFT or a bank card. Trade the smallest size the broker allows, such as 0.01 lots. On 0.01 lots, one pip is worth R0.10. So 20 pips of slippage costs only R2.00. That way, you learn real fills without risking much.
The mistake most people make here
The common mistake is to treat a demo fill as proof of what a live fill will be. In a fast market the price can move between the click and the fill, so the live price is worse than the demo price. Some brokers then send a requote — a new price to accept or reject — which a demo rarely shows. The fix is to practise on a demo for the platform and the sums, then move to a live account with the smallest size the broker allows, so the first real slippage costs a few rand rather than a large amount. Treat the demo as a calculator, not as a rehearsal of the market.Check yourself
USD/ZAR is at 18.4100. On 0.10 lots, one pip is worth R1.00. If the price moves 15 pips in your favour, what is the result in rand?
15 pips × R1.00 = R15.00.
The same 0.10 lots fill 12 pips away from the price on the ticket. What is the difference in rand?
12 pips × R1.00 = R12.00. That is the slippage cost on this size.
A demo shows a fill at 18.4100. A live account fills at 18.4120 on 0.10 lots. How many pips and how many rand separate them?
18.4120 − 18.4100 = 0.0020, which is 20 pips. 20 pips × R1.00 = R20.00.
Questions that come up next
Why does my demo fill at the exact price I clicked, every time?
A demo is software. It fills your order at the price on the screen when it receives the click. There is no market behind it, so there is no gap between the click and the fill. A live account has that gap, and the price can move inside it. That is why the demo price and the live price can differ.
How do I work out what slippage costs me in rand before I trade live?
Take the pip difference between the ticket price and the fill price. Multiply it by the pip value for your lot size. On 0.10 lots of USD/ZAR, one pip is worth R1.00, so 12 pips is R12.00. The answer is the cost of that one trade, not a forecast of the next one.
Does a requote always mean the broker is treating me badly?
A requote is a new price sent because the old one is no longer available. You can accept it or reject it. It is a normal feature of a fast market, not proof of bad conduct. What matters is that a demo rarely shows requotes, so the first one on a live account can surprise you. Read the broker's order execution policy to see when it uses them.
If I start live with the smallest size, will slippage still matter?
It matters, but the amount is small. On 0.01 lots of USD/ZAR, one pip is worth R0.10, so 20 pips is R2.00. The point of the smallest size is to meet real slippage and real requotes at a cost you can measure. You learn what the live account does without risking a large amount.
Can a demo teach me how I will react when a loss is real?
No. On a demo, a loss of R200 is only a number on a screen. On a live account, that R200 is money you could have used elsewhere. The platform cannot show you how you will feel or what you will do next. Only a live account with a small amount can teach that.
Are the rand figures on this page the same at every broker?
No. A broker may quote a slightly different pip value, round the fill to its own precision, or add a spread and commission on top. These vary between brokers. The rand figures here are only the arithmetic from the numbers given, so check your own broker's contract specifications.
The words used on this page
- Slippage
- The difference between the price on your ticket and the price at which your order actually filled. It is measured in pips, and it can work for you or against you. In a fast market it is usually against you.
- Requote
- A new price a broker sends when the price you asked for is no longer available. You can accept it or reject it. A demo rarely shows one.
- Pip
- The smallest common price step for a currency pair. On USD/ZAR, one pip is 0.0001. The rand value of one pip depends on your lot size.
- Lot size
- The amount of currency in one position. A larger lot size makes each pip worth more rand. On 0.10 lots of USD/ZAR, one pip is worth R1.00.
- Fill
- The moment your order is completed at a price. The fill price is what appears on your statement. It is not always the price on your ticket.
- Demo account
- A practice account that uses software instead of the live market. It teaches the platform buttons and the arithmetic. It cannot show real fills or real losses.
What to take away
- A demo teaches the platform and the sums honestly, and nothing about real fills.
- The ticket price is what you ask for; the statement price is what you got.
- On 0.10 lots of USD/ZAR, one pip is R1.00, so 20 pips is R20.00 of slippage.
- Move to a live account at the smallest size so the first real slippage costs a few rand.