Forex Trading Demo - Why You Need To Try It Before Trading Live

By Steven Hatzakis Thursday, December 28, 2017
Forex trading demo account is an indispensable tool for every trading newbie. Try it before live trading without losing all your money.

Introduction

A Forex trading demo account is an account that the broker offers for traders who want to practice their trading skills before going to the real market. It looks almost the same as a “live” account. The biggest difference is that it requires no deposit funds, which makes it totally free of risks and perfect for newbies.
But do you know all of the great benefits of a Forex demo account? Does this kind of practice have any drawbacks? Check this post to find out!

Basics of a Forex Trading Demo Account

Forex Demo Account

Some Forex brokers like Fxpro, FXCM, Hot Forex, GCITrading or FXDD provide free or unpaid demo account for traders who want to practice with an illustrated version of a live trading account. What are benefits that a demo account brings to you?
  • 1.Understand the system of FX trading and strategies
  • 2.Never suffer loss or gains from the demo account
  • 3.Experience the actual data and transition

Features of a Forex Demo Account

Some of a demo account’s features are similar to real trading account:
  • 1.Trading hours: 24 hours and 5 days per week
  • 2.Buying and selling price is the same as live values
  • 3.Bulk virtual currency is credited

Demo Trading Account’s Pros and Cons 

Pros of Forex Demo Trading

Many Forex traders use demo accounts to practice trading currencies and to test a new broker or other trading strategies. More common advantages are listed below.

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Reconsidering the Taste of Trading Currencies

For new traders, using a risk-free Forex trading demo account is a way to reconsider what they are really suitable for trading Forex or not. Everyone is different; trading currencies might fit for someone but not for all because of their lifestyles, personalities, and tastes.

Free Risk Taking

Novices who are studying how to trade in Forex market are often concerned about trading real money. Hence, a demo account helps them get close to the real-life environment and practice what they have learned without the fear of losing money. They will not be worried making common beginners’ errors.

Practice Money Management Plans

Well implementing money management principles significantly contribute to long-term success in Forex trading. Therefore, for beginners or experienced traders, using a demo account is an ideal means of practicing their money management techniques. They can directly practice these techniques on actual exchange rate movements and observe how virtual money profits benefit them.

Learn How to Manage Your Emotions

Unable to control yourself or let your emotions be free while trading is the easiest way to lead you to failure. Remember that separate your emotions from trading can differentiate between a successful trader and a loser.

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Try out New Strategies

A demo account allows experienced traders and newcomers to try out their new strategies. It limits the risks of suffering loss or making errors – what traders usually make. Thanks to a demo trading account, they are easier to get used to the Forex system and have the strategies went as planned.

Test New Broker’s Trading Platforms

We suggest that you should use the MetaTrader platform because it provides many online Forex brokers. That is a very convenient way for you to find a new broker’s proprietary platform which may satisfies your needs.

Check New Broker’s Helpful Services

Forex brokers hopefully let someone who is willing to open a live account with them to get access to their customer support departments and special client features, besides, educational and news services. This may be good opportunities for traders to consider whether holding the account or not. Before committing any actual funds, traders’ decisions are dependent on the quality of brokers’ overall services.

Cons of Forex Demo Trading

In addition to these advantages that a demo account brings, there are still common disadvantages which are found by some traders you should know before trading.

Limited Funds and Time

Many brokers often limit the number of funds and forbid to withdraw or deposit to an initial demo account. Moreover, demo trading account will be expired after a period. As the same time, every trading track records will be lost.

Different Trading Conditions

Although a demo trading account seems very realistic and uses real exchange rate data as it unfolds, the reality of trading can be quite different, especially during the fast markets surrounding major economic data releases or during major news event announcements.

Facing with Real Consequences

Practicing with demo accounts is a good way to limit risks and mistakes before live trading. However, not everyone can learn it well. There are people who really experience the realities of suffering bad losses will learn from this.

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Emotions May be Different

Manage emotions is one of the most important features of success. However, in the real-life situation, everything is different, novices or even experienced traders can forget this rule.

Sharing Your Personal Details

You have to supply your personal information when trying out a new Forex broker or any different reasons. To overcome this inconvenience, traders can use fictitious private information and create a new email address as well.

Conclusion

In spite of its pros, demo trading account is a great way for you to try out before creating a live trading account. That’s because it provides you with an illustrated environment of live trading to practice whenever you like. Do not skip this step if you want to become a real Forex trader and have a long-term success after.
As always, don’t forget to leave your comment below if you have any questions. Thank you for reading!

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