Module 2: Brokers, Accounts and Platforms (UK) · Lesson 7 of 11 · Back to course
A demo account lets you trade real market prices with pretend money. It costs nothing, and it’s where every lesson in this course expects you to practise. You already placed a first demo trade in Lesson 1.7. This lesson covers setting one up properly, what changes when you eventually open a live account, and why most beginners leave demo far too early.
Step 1: Choose an FCA-authorised provider
Use a firm that’s authorised by the FCA, and check it yourself on the register first (see Lesson 2.2). Even for a demo, you’ll be handing over your email and phone number, and scam firms use “free demo” offers to collect contact details. We don’t recommend any particular provider.
Step 2: Sign up for the demo only
Most providers offer a demo with just a name and email. You usually don’t need to deposit money or send ID until you apply for a live account.
- Don’t share card details for a “free” demo.
- Expect marketing emails and phone calls. You can opt out. A genuine firm won’t pressure you to deposit.
- If someone phones offering to “manage” your account or upgrade you to live with a bonus, that’s a red flag. UK firms can’t offer retail CFD clients trading bonuses.
Step 3: Set it up like a real account
This is the step most people skip, and it matters most.
- Set a realistic balance. If you’d only ever trade £2,000 for real, set the demo to £2,000 – not the £10,000 or £100,000 default.
- Choose the same product you’d use live: spread bet or CFD.
- Choose the same platform you’d use live (see Lesson 2.6).
- Write your risk rules down before the first trade: risk per trade, a daily loss limit and a maximum number of trades a day.
- Start a journal – a simple spreadsheet is fine.
Step 4: Know what a demo can’t teach you
A demo is excellent for learning mechanics and testing rules. But it has real limits:
- Emotions. Losing pretend money feels nothing like losing real money. Most people trade differently once it’s real.
- Fills. Demo orders may fill more smoothly than live ones, with less slippage, especially around news.
- Costs. Some demos don’t charge overnight financing or show the same spreads as live accounts. Check.
- Expiry. Some demo accounts expire after a set period; you may need to open a new one.
The answer isn’t to skip demo. It’s to treat it seriously, follow your rules exactly, and move to live with very small sizes.
When you go live: the appropriateness test
When you apply for a live account to trade CFDs or spread bets, a UK firm must assess whether the product is appropriate for you. This appropriateness test usually asks about:
- your trading experience (for example, how often you’ve traded leveraged products),
- your knowledge of how leverage, margin and losses work,
- sometimes your education or work background.
If the firm thinks the product may not be appropriate, it must warn you, and some firms will refuse the application. Don’t “game” the answers. The test exists because these products cause most retail clients to lose money. If you fail it, that’s useful information: go back to demo and to this course.
You’ll also go through identity and address checks, and you may be asked about your income and savings.
Why stay on demo longer than you think?
Most beginners move to live after a handful of good demo days. That’s usually a mistake, because a few days tells you almost nothing – a good week can easily be luck.
A more useful test is to stay on demo until you can tick every box below:
- [ ] At least 50–100 demo trades using the same written rules.
- [ ] At least two to three months of regular practice, including some losing weeks.
- [ ] You followed your rules on at least 9 out of 10 trades (journal it).
- [ ] No platform mistakes – wrong size, wrong direction, missing stop – for a month.
- [ ] You never broke your daily loss limit.
- [ ] Your results are positive after costs over the whole period – and you understand why.
Even then, a positive demo record doesn’t mean you’ll make money live. It means you’ve earned the right to try with very small sizes.
Example (illustrative numbers)
All figures are made up for teaching purposes.
Alex sets a demo balance of £3,000 and a rule of 1% risk (£30) per trade, with a 3% (£90) daily stop.
- Weeks 1–2: up £240. Alex feels ready to go live.
- Weeks 3–6: down £390, including one day where Alex broke the daily stop and lost £150.
- Weeks 7–12: steady, small gains; rules followed on 94% of trades. Net over 12 weeks: +£120 across 80 trades.
If Alex had gone live after week 2, the next month’s losses would have been real. The 12-week record is still small – but it’s far more honest, and it shows where Alex’s discipline broke.
The prop firm angle
Prop challenges are also run on simulated accounts, and many beginners treat them like demos – then panic when real fees are at stake. Use your demo to run practice challenges: same profit target, daily loss limit and maximum drawdown as a real one. If you can’t pass those calmly and repeatedly for free, paying for a real challenge is very likely to be money lost. We cover this in the prop challenge stage.
Key takeaways
- Open a demo with an FCA-authorised firm, and set it up exactly like the account you’d trade live.
- A demo teaches mechanics and rule-following, not how you’ll handle real losses.
- When you go live, the appropriateness test checks your knowledge and experience – answer honestly.
- Stay on demo until you’ve completed a decent number of rule-based trades over a few months, not a few good days.
Quick quiz
- Why set a realistic demo balance? (So your sizes and habits match what you’d really trade.)
- Name two things a demo can’t fully teach you. (Emotions with real money; realistic fills/slippage; sometimes real costs.)
- What’s the appropriateness test for? (To check whether a complex product like CFDs is appropriate for you, based on knowledge and experience.)
- Should you look up answers to pass the appropriateness test? (No – it’s there to protect you.)
- Is a positive demo record proof you’ll make money live? (No – it only shows you’ve followed rules in practice.)
Key terms
Demo account · Appropriateness test · Retail client · Slippage · Trading journal · Trading plan · Daily loss limit
Try this
Set up (or reset) your demo with a realistic balance. Write three rules on a sticky note: risk per trade, daily loss limit, and maximum trades per day. Copy the checklist above into your journal and tick nothing yet. Review it every Sunday. Don’t consider a live account until every box is ticked.
FAQ
Is a demo account free? Yes, with authorised providers. Be wary of anyone asking for payment or card details for a demo.
How long should I stay on a demo? There’s no fixed rule, but a few months and 50–100 rule-based trades is a sensible minimum. See How much time and money do you really need?
Can I use more than one demo account? Yes, but stick to one main account for your practice record, so your results are comparable.
Disclaimer: This page is general education, not financial or investment advice or a personal recommendation, and it doesn’t take your circumstances into account. Examples are hypothetical, for illustration only, and not an invitation to buy or sell. Learning a strategy doesn’t guarantee profits. Past performance is not a reliable guide to future results. Futures, spread bets and CFDs are complex and carry a high risk of losing money quickly because of leverage, and most retail traders lose money. With a real futures account, losses can exceed your deposit. Only trade with money you can afford to lose, and speak to an independent FCA-authorised adviser if you’re unsure. Read our full risk warning.