Backtesting involves testing a trading strategy on historical data to see how it would have performed in the past. This allows traders to evaluate the effectiveness of the strategy and make any necessary adjustments before risking real money in the markets.
Backtesting helps traders to identify the strengths and weaknesses of their strategy, as well as to refine their entry and exit points, risk management, and position sizing.
Demo trading, on the other hand, involves using a simulated trading account to practise executing trades based on a trading strategy. This allows traders to gain real-world experience without risking real money. Demo trading helps traders to develop confidence in their strategy, to practise managing risk, and to become familiar with the trading platform they plan to use.