If you plan to become a specialist in any field, you should spend thousands of hours practicing. But when it comes to risking money when training Forex it’s easier said than done. How can you decide to practice a skill when you lose money in the process?
That’s what the demo accounts were created for. It’s your chance to get acquainted with Forex trading without getting broke. Today you’ll learn what a demo account is and why you should use it.
What Is Demo Trading
You might think that demo and real trading are not the same things. And you are right. Though they are pretty close. When trading on a real account you’ll have to deal with anxiety and stress because of the risk of losing money, which you can’t experience while demo trading.
In any other case, the demo account completely matches real trading. You have access to the same markets with the same trading terms. Except trading is conducted with virtual money and that’s exactly what makes this practice account so beautiful.
Today most brokers offer demo trading for free. Still, when choosing a company, make sure that you are able to open more than one demo account and that you are able to return to demo trading any moment for further practice.
Now let’s take a look at the main advantages of demo trading.
Obviously, that’s the main benefit of demo trading. You can concentrate on learning without thinking of losing your funds. One of the most important skills any Forex trader should have is an ability to see numbers when trading, not money.
Since you don’t risk your investment while demo trading, you can learn to trade mechanically and then take this skill to your trading on a real account.
What you can learn on a demo account:
- Get acquainted with your trading terminal
- Learn to open/close positions
- Get familiarised with every possible situation in the market
- Learn to use indicators and Expert Advisors
- Practice your trading strategy and see how your trading plan works
There is no need to write a long explanation that without confidence you won’t be able to trade properly. When you’re confident, you don’t miss the chances that the market offers you. Practice and knowledge you gain on a demo account will provide you the confidence you need. Don’t proceed to real trading unless you’re sure about every trading decision you make.
When it comes to money, it might be difficult to control your feelings. Any emotion you feel will eventually lead you to failure, whether it is greed, anxiety, fear, doubt, rage, etc. In demo trading, you don’t get to worry about money. That’s why it’s a perfect way to learn how to trade with a clear head, without any emotions involved.
Testing of New Strategies and Tools
This part is my favorite. Even when you become a pretty experienced trader, a demo account continues to be a very useful tool. Once you need to try a new trading strategy, indicator, trading plan, Expert Advisor, or any other tool, you can return to a demo account and see how it works there first. You can never know in advance how a particular tool or style works for you. That’s why practicing everything on a demo account should always be your choice.
I hope this article has proven to you that a demo account should be your first step in your Forex career. When you have any doubts, have anything new to try, feel free to get back to your practice account. And please don’t take it as a step back, because trying everything on your demo account first would be the wisest decision you’ll ever make.