Mainly, because there are no emotions in trading demo. But when it comes to real money, novices tend to panic with every pip movement.In the casual world of free demo accounts - many young traders find they are able to garner impressive profits without a significant amount of effort. It almost seems too good to be true. But transferring this success from a demo account to a real account is far less common. Why is this?
Totally agree with you!In demo account virtual money is involved whereas in a live account real money is involved, while trading using demo account you are not emotionally attached you don't have fear of loosing that's why demo account performance is always better than live account performance.
It mostly reflects real trading conditions in the sense that you can test your strategy on real-time market conditions (as opposed to just historical data). There are a few hardships in real trading that it doesn't reflect, but you can still test if your methods themselves work well.If it doesn't reflect live trading conditions how can one trust the strategies developed on it?