In earlier times, less experienced or novice traders used to practice paper trading, which involved using pen and paper to jot down trade records of hypothetical positions, profits and losses and portfolios. This was done in order to practise trade strategies before involving and risking real money. Various trading strategies and tools have lifted the essence of forex trading to a new level. With the availability of so many advanced features and attributes provided by forex brokers on various Best Trading Platforms, individuals can now successfully exercise improved management and enhance the scope for returns.
The innovation that has eliminated the classic paper trading method and provided a better opportunity for traders are called forex trading demo accounts. Forex trading demo accounts are similar to practising trade strategies on a computerised platform. The main objective of demo trading accounts is to help new and less experienced traders to learn the basics of using a trading platform efficiently, practise by using a number of different strategies and anticipate the probability of profits or losses without risking their own funds. Most of these forex trading demo accounts are available on almost all the broker platforms and without charges.
So What Exactly Is A Forex Trading Demo Account?
Demo trading accounts are often considered a new and improved form of paper trading technique. A demo trading account is quite similar to a real account and consists of all the vital information that a trader requires to perform efficient trading activities in the forex market. Demo trading accounts are a great source of learning and practising, along with gaining an insight into the workings of the forex market. Sometimes by using a demo account, novice and less experienced traders are able to figure out if they should actually move ahead with a live trading account or not. A trader can easily make use of a demo trading account by visiting their preferred forex broker platform.
Benefits Of Using A Forex Demo Trading Account
If you are a new trader looking forward to enhancing your trading abilities, you should consider using a demo trading account before you start allocating real funds to a live account. There are several benefits that a demo account provides:
- Helps In Understanding The Basics Of Forex Trading- Directly jumping into the world of forex trading with little knowledge and know-how can lead to substantial losses and demotivation. For the less experienced traders, it is generally advised first to start practising on a demo trading account. A demo account will help the trader to gain an insight into the workings of the platform software and various methods and techniques that can be applied to maximise gains.
- Helps Understanding New Strategies- A demo trading account allows a novice or experienced trader to effectively test various new trading strategies and methods without risking their actual capital. Demo trading accounts provide the facility of using virtual funds that resemble closely with the real use of money in trading practises.
- Helps In Understanding The Psychology Behind Trading- Forex trading involves a variety of emotions such as doubt, fear, anticipation and euphoria. For efficient trading, it is very important to keep a check on these emotions as they can guide a trader’s behaviour to a great extent. A demo trading account helps to check emotions that might prove futile on trade decisions and helps manage them for better judgement and informed risk management.
- Helps In Training New Forex Traders- Most experienced traders use a demo trading account to train and guide new or less experienced traders. Most videos and tutorials we generally see online are performed on a demo account.
- Helps In Picking A Suitable Trading Routine- A trader can pick a suitable trading routine by practising on the demo trading account. A demo trading account will help you to analyse your peak performance hours and a suitable time period that suits your trading needs and strategies effectively.
Tips For Using A Forex Demo Trading Account Efficiently
It is essential to use a forex demo account efficiently, as using it the wrong way may not provide us with deep insight and actual knowledge. Once we start using a live account, we might witness a conflict of interest due to this reason. Here are certain tips that should be kept in mind in order to use the demo trading account efficiently:
- Always start using a demo trading account with the same amount that you would actually put to use in live trading. A demo account provides you with virtual funds; instead of using them together, you should use only the intended amount.
- Never assume that you are using virtual funds. When using a demo account, treating it like a live trading account is very important. Always assume that you are using a live account that holds real money, as this will help you to be extra cautious while executing trade strategies and decisions. If you fail to do so, you will always create a new demo account after losing money on the previous one, which does not happen in the case of a live trading account.
- The most common mistake that less experienced or novice traders make is indulging themselves in over-trading practices. Avoid over-trading as you wish to do in a live trading account.
Why Should You Open A Demo Trading Account?
So you have seen a lot of people earning a substantial amount of profit by trading forex lately. Impressed by their strategies and monetary returns, you plan on practising trading yourself. You wish to learn all about their trading strategies and methods that they use to magnify gains. So in order to do so, you visit several websites, watch a lot of videos, and take advice from different people, but you still need to get a clear idea.
I would suggest you use a forex demo trading account. Yes, a new or inexperienced trader can use a demo account to learn the basics and advanced methods and technicalities surrounding the functioning of a forex market. A demo account enables a trader to practise as many trading strategies and ideas as he can use effectively on a live account. The demo trading account is a replica of a live account and provides virtual funds you can use, like real money. A demo account is a great way of anticipating the potential for a strategy to work before actually implementing it on a live account. A demo trading account is an efficient tool that enables you to track your progress, test various trading styles, requirements of funds and when you should actually step inside the live trading market.
“Practise makes a man perfect” is rightly quoted as no skill and expertise can be acquired without practising. In order to polish your trading skills and become a successful trader, you should definitely sign up for a free forex demo trading account. Not only will a demo trading account help you to learn the basics, but it will also enable you to master your trading skills within no time.