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The broker supplies your demo account with an amount of money and youre good to go. You can trade in real time with real assets and you get to see how you manage trading with your broker or new strategy.
A demo account is exactly the same as a real money account, without the real money. You can use all the features and tools you need or want to learn, until you are confident enough to start your own real money account. Most demo accounts are positively converted to a real money account.