Monday, 18 September 2017

Demo Trading: Pros And Cons

Posted by Valentine at 10:38 Labels:

The term “demo account” is not a strange one for many of us. In recent years, the usage of demo trading accounts for learning and practicing purposes has increased significantly. Nowadays, almost every Forex broker out there offers a demo account for begginers, trying to convince them that demo trading is their best choice to become (eventually) great traders.

As with almost every single thing in this world, people have questions about it. Are trading accounts good enough to become successful traders? Are the offered market conditions equal to real accounts? Is it only a trick to engage me and take my money?

There are so many trading accounts right now that is nearly impossible speak for all of them. But let’s some key facts about them and see if it helps you define by yourself their real value.

Pros

1 - See if Forex trading is right for you

Try and see it for yourself. Not all of us are made for this kind of investment. The learning curve is not an easy thing to deal with and some would rather prefered managed trading accounts.

2 - Trade without risking money

May be the biggest gain when trying out a demo account. No real money involved. It’s nothing more than a videogame, but with the opportunity to become something real.

3 - Practice and improve your strategy

Trying out new strategies in real market conditions can be hard and risky. Therefore, even experienced traders eventually turn into demos to find whether their strategies work or not and how to improve them.

Cons

1 - Better execution than real trading accounts

Demo accounts tend to show better execution than real accounts, as there’s not desk behind them and the risk of slippage is considerably lower. Trading in the real world, you could experience minor changes between the price you’ve seen when placing an order and the one your order was actually executed.

2 - More money than you would actually use

When opening a demo account, you would be offered to simulate an initial capital investment of 10,000 USD or even more. The thing is… not all of us are ready or willing to invest that amount, especially if Forex trading is a new activity for you.

3 - Emotionless trading

Believe it or not. Trading is all about emotions and how to manage them. If you have nothing to fear, then you subtract that emotional content. You should embrace your emotions and learn how to control them appropriately to increase your success rate.

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