<p>A <strong>Demo Account</strong> is a practice trading account that uses virtual funds instead of real money, allowing users to explore market platforms, test strategies, and become familiar with order execution without risking capital. Typically offered by brokers such as <strong>STB Provider</strong>, these accounts mirror the functionality of a <a href="/NewSite/encyclopedia/live-account/" class="ency-link">live account</a>, including access to real‑time price quotes, charting tools, and the same trading instruments available on the <strong>MetaTrader 5</strong> platform. They serve as an essential first step for beginners who need to build confidence and for experienced traders who want to validate new approaches before committing actual funds.</p>

<h2>How It Works</h2>
<p>When a trader opens a Demo Account, the broker credits the account with a predetermined amount of virtual currency, often ranging from $1,000 to $100,000, depending on the provider’s policy. The account operates on the same server infrastructure as a live account, meaning price feeds, spreads, and execution speeds are identical. Users can place market, limit, stop, and OCO orders, adjust leverage up to the broker’s maximum (for example, 1:300 on STB Provider), and monitor profit and loss in real time. All transactions are simulated; no actual settlement occurs, and the virtual balance adjusts based on the outcome of each trade. Most brokers allow unlimited replenishment of the demo balance, enabling continuous practice.</p>

<h2>Why It Matters for Traders</h2>
<p>A Demo Account provides a risk‑free environment to learn the mechanics of trading platforms, which reduces the likelihood of costly errors when transitioning to a live account. It helps traders understand how <strong>leverage</strong> amplifies both gains and losses, and how margin requirements affect position sizing. By testing strategies in a demo setting, traders can assess win‑rate, risk‑reward ratios, and the impact of slippage during volatile news events without jeopardizing real capital. Additionally, the demo experience builds psychological resilience, as users become accustomed to the emotional swings of winning and losing trades in a controlled setting.</p>

<h2>Example</h2>
<p>Suppose a trader opens a Demo Account with STB Provider and receives $10,000 in virtual funds. They decide to trade the EUR/USD pair, applying a leverage of 1:100. With a $10,000 balance, the maximum notional position they can control is $1,000,000. The trader buys one standard lot (100,000 EUR) at 1.0950, requiring $1,095 of margin. After the price rises to 1.0980, the position gains 30 pips, equivalent to $300 profit (since each pip for a standard lot equals $10). The demo balance updates to $10,300. If the price instead falls to 1.0920, the trader incurs a $300 loss, reducing the balance to $9,700. Throughout this process, no real money is at stake, yet the trader experiences the exact same calculations they would encounter on a live account.</p>

<h2>Key Takeaways</h2>
<ul>
    <li>A Demo Account uses virtual funds to replicate live trading conditions.</li>
    <li>It allows risk‑free practice of platform features, leverage, and strategy testing.</li>
    <li>Experience gained in a demo environment helps bridge the gap to confident live trading.</li>
</ul>