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Trading on a demo account

Beginners, according to Sharefounders, usually use the account for fear of initially running into a Scam when training.


Sharefounders

 

A demo account on the stock or currency market is an exact copy of a real account of the standard type, where trading is conducted with virtual funds.

In terms of basic parameters and capabilities, the demo account does not differ from the usual one, so it is often used by beginners and experienced traders to perform certain tasks: training, training, and working out new strategies.

Sharefounders noticed that, as a rule, beginners choose a demo account in order not to get caught in a Scam first, to train and gain experience, and masters-to test new strategies, test some solutions on the history in real market conditions.

You can treat working with demo accounts in different ways, but you should definitely not ignore this possibility. If you use such an account wisely, it can provide a lot of benefits and advantages.

What is a demo account in simple words?

The demo account can be called a kind of simulator of the standard one: everything is similar in them, except for the funds that are used in trading. When working with a regular account, a trader works with their funds, multiplying or losing them, and trading on a demo account involves using virtual funds.

Dignities.

Sharefounders recommends that before opening a Forex demo account, you need to determine that the broker's activity is not a Scam and choose the direction of trading, tools, and highlight the main points.

Main advantages of demo accounts:

  • The opportunity to check the General direction of trade-to understand whether this activity is suitable for a beginner, whether it is necessary to register and start real trading.
  • A chance to get invaluable trading experience and learn how to cope with different situations, learn how the trading platform works, etc.
  • Testing new or no longer profitable strategies, studying their pros and cons, and correcting them before they are introduced to real trading.
  • A chance to practice working with new assets, tools, etc.
  • Ability to evaluate the performance of the broker and its software-speed, technical support, functionality, interface, etc.
  • Unhurried training in market analysis, the ability to practice all the stages of a beginner (in the course of training courses or viewing a webinar, for example) without risk with your own funds.
  • Studying the functionality of the Quik and MetaTrader 4/5 platforms in working with the futures, currency, and stock markets.
  • The opportunity to learn how to cope with your emotions-after experiencing «losses» and «profits», unexpected spikes in the market and unpredictable events, the trader will react less sharply next time.

Disadvantages.

Many traders on the stock market do not want to open a demo account, claiming that it is «disconnected» from reality and still does not give experience with real funds. There is a certain truth in this, so before you start trading, you should also study the negative aspects of using demo accounts.

Why open demo accounts on Forex?

On Forex, a demo account is most often opened to test new trading systems and get at least an initial idea about the features of trading. Beginners, according to Sharefounders, usually use the account for fear of initially running into a Scam when training. Experienced traders return periodically during periods of adjustment of old or introduction of new strategies. The stock market also provides certain opportunities for opening a demo account in order to study the features of trading on the site.

Bad influence of the demo on the trader's work.

Despite the fact that the demo account offers a lot of advantages, you should not get carried away with working on it. There is even such a term as «demoser's syndrome» — this is the name for the psychological state of a trader that appears after a long trade on a test account. Traders no longer perceive real trading as a job and a serious business, they start treating it as a game, increasing the risks, without thinking about the consequences of the decisions made.

 



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