Downsides To Demo Accounts

Oct 11, 2015
20
3
2
27
Demo trading may cause you to develop certain risk-loving behaviors that will surely ruin your live account in no time. It all comes down to trading psychology. Top Forex brokers will try to caution you against putting too much faith in trading results achieved with a demo account, mostly because such achievements are emotion-free. Since you don't risk real money in a Forex demo account, even with the best Forex trading platform, your results won't be reflective of what you could achieve under similar circumstances with a live trading account. Live trading brings emotional factors of greed and fear, which one must learn to control through experience. This is why we suggest that once you test-drive your Forex broker and gain some initial trading experience with a demo account, you open a live account with a minimum possible deposit, and move on with live trades with absolute minimum trade size, which is generally 0.01 lot in online Forex trading. Some of the best ECN Forex brokers accept initial deposit of as little as $100. Don't expect to turn it into a million dollars. You may lose a small amount of money this way, but the most you risk here is a small investment that will go a long way in helping you not only master your emotions, but also test the reliability and transparency of your Forex broker.
 

jimcarter

Active Trader
Nov 10, 2017
38
9
44
38
USA
Demo trading has some drawbacks, despite being designed and implemented to improve the trading experience:

1) Lack of Real-Time Consequences: Forex demo trading provides a virtual environment in which to trade with virtual money. This environment is opposed to real-time trading. The lack of risks makes it difficult for traders to accept the fact that one wrong move can completely derail their trade.
2) Unlimited Investments: Because demo trading accounts are virtual money, you can start every trade with a million dollars! Would you be able to do that in a real-world situation? Most traders will be working with their own money, and even the smallest mistake can cause them to lose it all. You're bound to lose control when you have unlimited potential at your disposal.
3) No Real-Time Market Fluctuations: A real-time Forex market fluctuates horribly and has enormous destructive potential; a demo trade, on the other hand, does not replicate this trait. You will be working worry-free on demo trades, as there will be no risk or loss to worry about. Real-time trades will be terrifying once this becomes a habit.
4) Inadequate Emotional Preparation: Dealing with risks, losing money, and trading in real-time all have emotional consequences. While exchanging currencies, each trader's heart is filled with either fear, greed, or confidence. Learning how to deal with these emotions is just as important as trading itself, and demo trading will not prepare you for it!
 

Resolve

Master Trader
Dec 7, 2013
1,048
8
74
Demo trading has some drawbacks, despite being designed and implemented to improve the trading experience:

1) Lack of Real-Time Consequences: Forex demo trading provides a virtual environment in which to trade with virtual money. This environment is opposed to real-time trading. The lack of risks makes it difficult for traders to accept the fact that one wrong move can completely derail their trade.
2) Unlimited Investments: Because demo trading accounts are virtual money, you can start every trade with a million dollars! Would you be able to do that in a real-world situation? Most traders will be working with their own money, and even the smallest mistake can cause them to lose it all. You're bound to lose control when you have unlimited potential at your disposal.
3) No Real-Time Market Fluctuations: A real-time Forex market fluctuates horribly and has enormous destructive potential; a demo trade, on the other hand, does not replicate this trait. You will be working worry-free on demo trades, as there will be no risk or loss to worry about. Real-time trades will be terrifying once this becomes a habit.
4) Inadequate Emotional Preparation: Dealing with risks, losing money, and trading in real-time all have emotional consequences. While exchanging currencies, each trader's heart is filled with either fear, greed, or confidence. Learning how to deal with these emotions is just as important as trading itself, and demo trading will not prepare you for it!
We will need to understand the subtle amount of difference between trading in the Demo and the Real trading accounts.
 
Apr 21, 2022
9
1
3
28
We will need to understand the subtle amount of difference between trading in the Demo and the Real trading accounts.
We should be able to understand the purpose of a demo account. Demo Accounts are not built for developing excellent trading skills in a trader. But they were built to have a good understanding about the working of the trading platform and market environment.
 

HeavenLeighGill

Active Trader
Aug 5, 2021
389
34
44
27
Very good point. Demo accounts are great and I think everyone should start with one, but there are some blind spots there that can affect people when they go live. Being aware of the key differences is one step to being more informed and having a better chance to avoid that.
 

Dora_WalletInvestor

Active Trader
Aug 17, 2020
301
46
44
In my opinion the key is to just use demo accounts with the awareness that you may face more challenges on a real account, and be extra careful when transitioning from one to the other. Even with the downsides of using demo, it is still a useful option for beginners.
 

Resolve

Master Trader
Dec 7, 2013
1,048
8
74
In my opinion the key is to just use demo accounts with the awareness that you may face more challenges on a real account, and be extra careful when transitioning from one to the other. Even with the downsides of using demo, it is still a useful option for beginners.
When we can learn more about the use of the Demo based trading accounts our income from such trades can also get more.
 

Ak04

Newbie
May 31, 2022
29
7
4
23
I don't remember how it was demo trading. Maybe for a few days a long time ago.

The big thing that amateurs or even the most enlightened forex forum member doesn't realize, even in live for the matter, is that the market environment is "REFLEXIVE" or "REACTIVE".

Meaning when you enter a market order, the price will respond if you watch closely. You are now a part of the market so to speak. This is due to a number of things, but mainly algorithms is all I want you to think.

There's a duplicity about this particular subject and the better trader will have their ideas. I've seen it in action in all sorts of conditions and brokers and there is somewhat of a commonality...That is all I'll say about that since it's not the subject.

So what I was saying is that your order is now recognized and the market will test you for real...

You don't get this in fake trading and ultimately unless you are just getting used to the bells and whistles of the platform, it is just an academic exhibition for you. Fooling yourself into thinking this is real is wrong. It is better to start off very small....believe it or not it does not matter the size of the position for the market to recognize it.

So this I say is the best approach to getting your feet wet with the markets. Use very small amount and with money you definitely can stand to lose.

Hope this puts this debate to bed once and for all because I've never seen anyone on any of these forums tell this. Perhaps that's why 99 percent never make it beyond mediocrity.
 

Lewis Capaldi

Newbie
Jan 23, 2022
24
1
4
45
I do agree on your small demo trading capital’s based opinion! Actually, big capital will destruct you! By the way, till now demo trading is the best way to learn Forex trading; new traders just need to concentrate enough on their demo account! But obviously there is no shortcut way in Forex!
 

Flophouse

Newbie
Mar 22, 2022
29
0
2
26
I do agree on your small demo trading capital’s based opinion! Actually, big capital will destruct you! By the way, till now demo trading is the best way to learn Forex trading; new traders just need to concentrate enough on their demo account! But obviously there is no shortcut way in Forex!
I totally agree with your statement. There are many traders who seek quick profits and neglect trading on demos. They even trade larger positions without having appropriate knowledge of the trading platform and the market. This eventually leads to blowing up the account.
 

BritneyHolden

Newbie
Mar 28, 2022
27
2
4
26
I do agree on your small demo trading capital’s based opinion! Actually, big capital will destruct you! By the way, till now demo trading is the best way to learn Forex trading; new traders just need to concentrate enough on their demo account! But obviously there is no shortcut way in Forex!
It is important that traders develop the right trading psychology without losing much. For that, traders should start with trading small accounts.
 

Ak04

Newbie
May 31, 2022
29
7
4
23
I honestly think most of these people new to trading shouldn't even be attempting it at all based off what I read here.

Everything is a MANTRA to them..."we must"...do this, do that...
 

Haruto

Banned
Oct 26, 2022
33
2
9
45
I believe, nowadays backtesting is much better option than the demo trading! Because, demo is such a long process, but backtesting is quick & effective!
 

Ak04

Newbie
May 31, 2022
29
7
4
23
Backtesting is a futile experiment if you understand the fx market.

Just continue with demo if you believe otherwise and never go live.