Importance of Demo Accounts

Adam Smith

Trader
Dec 14, 2015
42
9
24
35
There are a lot of platforms which help new traders get acquainted with the rules of trade. They do this by enabling those traders to practice trading strategies through demo accounts. What are demo accounts, one might ask. To answer the question in short, demo accounts are dummy accounts which are used solely for the purpose of practice. It is like “test-driving” a car in supervised premises before one actually takes it out on the busy streets. These accounts are of paramount importance; for without these, a trader would be completely lost when it comes to actual trading. These demo accounts prevent a trader from suffering losses early into his trading stint, and these also give a trader all the necessary ideas regarding what he should expect from the eccentricities of the liquidity market. No matter whether it is foreign exchange, stock trading or a trade in commodities, demo accounts are mostly indispensable for conducting trade online. Numerous ways are documented below, in which trading through demo accounts could benefit people: (information shared by [URL deleted])

Teaches Traders to Link News with Price Levels: One of the greatest features of the foreign exchange market, when you compare it to the stock and commodity trading markets, is that the former is seen to move at a snail pace, when it is contrasted with the two mentioned later. However, this chiefly happens when there is no trading with leverage. However, once the trader has money in the Broker’s account, then they would see a huge change in the way the price fluctuates, specially if it is in response to big finance-related developments, or incidents related to political news.

The Platforms Can Be Understood: As already mentioned, all demo trading accounts assist the trader become acquainted with the ways and means of survival and profiteering in the market. Not just that, it can even give the trader a beginner’s guide regarding how to use a platform appropriately. Both of the above are quite important if one is looking to get off to a profitable start.

Teaches the Link Between Size and Profitability: No number of times is enough to emphasize on the size of a particular trade and how important it is for a trader looking to profit. Sadly however, its importance is not realized enough by most beginners. Though using a demo account will make them informed about the tendencies of currency movements that take place daily, if one cares to pay enough attention. In case a particular pair is extremely volatile, trading in large lots is a really bad idea. On the other hand, a currency which is stable for can be traded in big lots.

There’s Scope for Back-testing: If a trader is able to pick up a few strategies, then the first thing that they should do is to test how effective they are. However, a lot of traders are jittery on their first outing in real-time trade, so a demo account would be useful in aiding them to get rid of the frights by making them gain confidence in their strategies. This is done chiefly by allowing the traders enough practice by testing their methods on past, archived situations and see how the results turn out. This would give them an insight on how the market would react under specific circumstances.
 
Last edited by a moderator:

radex78

Active Trader
Nov 15, 2015
670
17
34
41
Demo account is step for trader especially beginner they begin to learn forex trading, in demo account they can test skill and knowledge or system trading with free from losing real money because only use virtual money, making preparation in demo account might will minimize the risk because misunderstanding with the market, demo account can be place to learning in real market condition
 

tammy

Newbie
Jun 5, 2016
4
0
2
48
demo account is a good start for newbies. I'm not the exception.
it helps me get use to the forex market which wasnt familar with me.
it's risky market but with virtual money, I can free to learn through placing orders.
 

radex78

Active Trader
Nov 15, 2015
670
17
34
41
Not only for newbie, some trader experienced they still use demo account if want to backtesting ea or software before used on real account, and in demo account any trader can implemented system trading with free of risk
 
  • Like
Reactions: hayseed

hayseed

Master Trader
Jul 27, 2010
428
103
109
usa
hayseedfx.com
Not only for newbie, some trader experienced they still use demo account if want to backtesting ea or software before used on real account, and in demo account any trader can implemented system trading with free of risk
//----

hey radex.... you are correct, many of us that have been trading for years still might occasionally use a demo.... often for purposes just as you mentioned.... it keeps much of the clutter from test ea's, indicators and scripts out of the live platform......

but there can be a risk in something free of risk.... financial abstraction is a risk...

when the money isn't real: the $10,000 experiment.... that is a video i've watched many times.... it is in my top ten favorite tedtalks because all 3 girls, in my profile picture, play monopoly in the exact same manner..... and all 3 trade their own live forex accounts..... with light guidance of course .....

like most traders i jumped into live trading too quickly before ever even using a demo account... big mistake..... and while i've yet to blow an account or get a margin call, there is no doubt in my mind i should have originally spent more time using a demo....h
 

fxapex

Active Trader
Jun 7, 2013
258
7
29
Demo accounts are very good as they give a real market experience to trader, trader could understand market behaviour. It also helps experienced traders in checking with their trades or predictions of market movement.
 

radex78

Active Trader
Nov 15, 2015
670
17
34
41
Might one msitake use demo account is often start in demo account use big initial deposit let say 5000$ in accout and this will become strong margin, but if trader already in real might not use sufficient capital might less than 100$ and this as weak margin if compared with 5000$, good in demo but bad in real because this is included one reason
 

tammy

Newbie
Jun 5, 2016
4
0
2
48
Might one msitake use demo account is often start in demo account use big initial deposit let say 5000$ in accout and this will become strong margin, but if trader already in real might not use sufficient capital might less than 100$ and this as weak margin if compared with 5000$, good in demo but bad in real because this is included one reason
so are you suggesting that we should start in demo account with the same amount of money we gona deposit in real account?
 

radex78

Active Trader
Nov 15, 2015
670
17
34
41
so are you suggesting that we should start in demo account with the same amount of money we gona deposit in real account?
Yes I think will good for learning if demo account uise equal money that want to prepared in real account, this is only for learning stage how to manage these money in demo account, if still often fail it's mean in real account will not differ much
 

f4forex

Active Trader
Oct 8, 2015
231
2
29
37
I guess if anyone is going to trade live after trading demo account then it will be good if they start with small amount to check the other processes of the broker as well.
 

jellyeb

Active Trader
Jun 10, 2015
248
11
29
Yes live trading should be started with small capital like 100-200$ because newbies can not pick right order size in their trading and will blow up more money getting same experience!
 

radex78

Active Trader
Nov 15, 2015
670
17
34
41
In demo account we can test any new ea, and or system trading based on indicator with free of risk, and in demo actually we also can learn how to trade with risk management and money management
 

kora_trader

Trader
May 11, 2016
21
0
12
26
Yes, demo account is very important, nowadays, many brokers make use of demo account. it's no longer for newbies to get on with the trading environment, tool, platform, it's more than that. Brokers like Tickmill, Hotforex, ENess offer demo contest for newbies and the prize is real money. Such campaign attracts many traders who join in every week. I think it's a great advantage and we shouldn't waste it.
 

radex78

Active Trader
Nov 15, 2015
670
17
34
41
Maybe not all beginner they like use demo account but actually they need use demo account to practice in real market condition using virtual money to backtesting system trading, as good preparation if they willingly to spent time in demo account not only a month or two month but on years
 

radex78

Active Trader
Nov 15, 2015
670
17
34
41
Success in demo account is not guarantee will success in real account, usually trade in demo will free from emotion, and start with huge initial capital, but trade in real account might trader only use small capital and still trade with emotion fear to losing, greedy is reason for failure in real account
 

coolboy

Newbie
Jun 13, 2016
17
1
3
31
India
Demo Account is the most efficient and effective way to learn Forex Trading. It would be the best way to learn Forex Trading.
 

aqibFXmart

Trader
Jul 5, 2016
28
2
9
30
Demo accounts are very good as they give a real market experience to trader, trader could understand market behaviour. It also helps experienced traders in checking with their trades or predictions of market movement.
but my people are not interested in trying out demo trading as I understand a lot of things in the forex business. I just assume demo trading is a time-consuming activity. moreover my other activities than trading forex. and I just need the courage and confidence with what I have learned over the years.
 

radex78

Active Trader
Nov 15, 2015
670
17
34
41
Maybe many trader not interested in demo they have reason only waste of time and money, beause although ablemaking good profit it's unwithdrawable, but if demo account having goal to backtesting it will useful