The importance of Forex demo accounts and how to maximize the benefits in trading
Last Updated on November 9, 2020
New traders can benefit from a forex demo account to the maximum extent possible. We can consider it as one of the best educational tools.
Newcomers to the trading world sometimes ignore the advantages of using a practice trading account and it’s a must that all beginners start with a demo.
Almost all FX brokers provide a forex demo account for free. This type of account offers the advantage of trading forex with virtual money, with the opportunity of using the same tools and take the same steps when working on a real forex account, except for not risking real money.
Top 7 advantages that Forex demo accounts can offer you.
- Complimentary: You will not need to deposit any money or pay any fees when opening a demo account with top online forex brokers. Even if you are not yet sure of the correctness of your decision to switch to Forex trading, the ‘Free’ feature is a ‘cool’ thing that will make it easy for you to explore the whole thing!
- Practice trading: The free demo account allows you to master trading skills, develop new strategies, and gain some important experience in currency trading. This is since all currency pairs move in the same lanes, regardless of the type of account, while the only difference lies in the fact that the invested funds are real or virtual.
- Learn about the broker platform: The demo account provides the advantage of trying the brokerage firm’s platform before moving to work with it on a real account. This feature will be very useful especially when working on electronic trading platforms.
- Free chart tools: Even if you do not plan to trade with a specific broker, you can still open a demo forex account and use the charting tools provided by the trading platform. This feature will also be very useful if you opened your demo account with a broker who has multiple advantages, none of which is the efficiency of the trading platform.
- Execution quality may vary: Unfortunately, when using their demo accounts, you will encounter high-quality execution services with many forex brokers, as you will not experience slippage, re-quote, or execution delays. However, when you start to trade on a real account, you will encounter some unpleasant surprises, so you need to be cautious in the first period of switching from the practice account to the real account.
- Some demo accounts have expired: Some Forex brokers provide a demo account that will expire after 30 days or a similar period. Of course, you can open a new demo account, but there you will lose all the statistics and deals that you opened in the old account, so try to find a broker that offers extended demo accounts without applying certain conditions to the permitted use period
- Different emotional aspects: Forex trading psychology is very complex. When trading on a demo account with virtual money, you will not experience frustration, nor will you fall prey to feelings of greed and greed when you win some other deals. Feelings and emotional aspects play an enormous role when working on a real account. That is why you need to consider the behavioural and psychological aspects from the first moment when it is decided to move from the experimental environment to working in the real market.
Undoubtedly, we can list many and more advantages of demo forex accounts, but the main good point is that they are available for free without any trouble or cost. Nevertheless, we should not lose sight of the shortcomings of this type of trading account, which may be capable of destroying your future in the forex market unless you pay close attention to it.
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