Forex demo account vs real account: advantages and disadvantages
Probably at the very beginning of their trade, many traders are pondering over the questions – is it worth to open a Forex demo account or immediately start trading for real money? What are the differences between demos and real accounts? Having learned how to trade on a demo, can I also successfully trade in a real account?
As a result of it, the internet is full of attractive offers to open a demo account. Forums are full of stories of traders about their experience in the demo account and how much they have earned in doing so. All this looks so attractive that it is difficult not to believe in the success of such a trade. Therefore, the truth, as always, is somewhere in the middle.
What is Forex demo account?
Demo account – this is a free training trading account, almost corresponding to the real one, but you conduct all trading on virtual money. You earn a profit or merge the deposit with virtual money.
Opening a demo account is a matter of just 2 minutes and is not difficult for a trader.
If you are already a client of some brokerage company, then you can open such an account in your personal account. If not, you can open an account in the trading terminal (for example, Metatrader 4), which you can download from the developer’s site.
What is the demo account purpose?
To become acquainted with the trading platform and the peculiarities of the market of trade. You can study graphs, make observations on the market, analyze it. You will not jump with a parachute without first having read the instructions.
To get acquainted with the financial instruments for which you will trade. You can test each of them and understand how they work.
To hone their technical skills. It’s important when in real trading there is no time to think about actions, and the speed of the reaction is important.
To test your trading strategy. You can see how your strategy will work, its advantages and disadvantages, bring it to the ideal state.
What are the advantages of a demo account?
To open account is a couple of minutes and clicks.
It does not need to be replenished, and you can use it for free.
You can hone your trading skills in comfortable conditions and without risks, study the features of the market and tools, and develop your own trading strategy.
It has no expiration date.
You do not risk real money, which eliminates the problem of psychological pressure and stress.
What are the dangers of trading on a demo account?
Let’s say you trade for virtual money. You have a dull sense of responsibility for this money and your mistakes in trading. You will think, the deposit in 1000 dollars has merged! Tomorrow I will open a new one.
The lack of psychological pressure and emotional stress makes you very discouraged. You become inattentive to your trading. You can stop putting stops and trade as horrible.
You get used to the fast and high-quality opening of positions. The orders on the demo and in reality work in different ways. Demo orders execute faster. Since in reality, this does not always happen. Dishonest brokers, in fact, can cheat and you will stay without a deposit.
Since the humanity is evolving only from real experience – when you can feel the “taste” of real money, victory, defeat. Due to you can learn and appreciate the gained experience.
Finally, you can determine your minimum possible real deposit and train on it. Hence you will learn Quickly, be attentive. You will feel the emotional feeling of loss.
Choose the best Forex broker to open the demo account.