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30.08.2021

Should One Trade on A Demo Account?

Offering Forex trading with a demo account should be one of the first services a brokerage provides to clients. Still, demo accounts have been controversial since their inception.

Some financial professionals and analysts believe that virtual trading funds are not of practical value. Others call it the most convenient tool for honing trading skills.

This question is especially relevant for startups in the financial services market. Should a brokerage company buy software with a demo feature, or can a broker go without it?

Registration of a Demo Account

A demo account is a virtual account for trading in the Forex, crypto, or CFD markets. Unlike a real version, it is filled with virtual money. Many brokers provide a demo Forex account without registration. After downloading and installing a trading platform, a client selects the leverage from the drop-down list and starts trading. Demo version of a platform enables a user to:

📌 Place buy or sell orders
📌 Check the history of all transaction
📌 Test multiple indicators
📌 Build graphs and so on

Hits of Using a Demo Account

By using a demo account on the Forex market, a trader gets the opportunity to:

🔵 Gain trading experience
🔵 Hone skills
🔵 Create a strategy and check it in real-time
🔵 Master a risk management system and more

The main difference from real trading is that a trader does not risk his/her money at all. Thus, the burden of responsibility and the pressure of psychological factors are absent.

Misses of Using a Demo Account

The main disadvantage is that a demo platform gives a newcomer a false sense of confidence. Having tried their hand with virtual funds and received random profit, newbies open real trading accounts and start trading like there’s no risk at all. As a result, they cannot cope with emotions and begin making typical mistakes, losing money.

Demo Account for A Broker: Is It Worth It or Not?

Demo accounts are a convenient tool that is appreciated not only by beginners but also by experienced traders. Developing and testing a new trading strategy with hard-earned money can be expensive, while virtual funds cost nothing.

Demo accounts are a must-have service for every broker or a dealing center. They will not bring any harm to experienced market participants. Meanwhile, beginners should clearly understand what the demo is used for and when to switch to a real one.

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