Demo trading accounts are not just for beginners. Whether you’re a seasoned trader or professional, there’s nothing wrong with opening a demo account.
Nowadays, almost every trading platform offers free demo accounts. For some people, a demo account can only be used by first-time traders. However, it’s a lot more than that. Since demo accounts also feature the same environment as the real-time, everyone will be updated about how the market works.
But aside from being updated on what’s happening in the real world, trying demo accounts for trading also helps find the best platform.
Are you still having doubts about the benefits of trying demo accounts for trading? You should check the list below!
1. Increase knowledge and experience
Whether you’ve been in the trading field recently or for a long time now, you can still find yourself learning new things about trading. Besides, if you’re used to trading in a certain market, you can also practise trading with others.
For instance, if you’ve been trading forex since day one, you can also try indices using a contract for differences (CFD). On the other hand, if you’re a beginner, being familiar with the different markets and accounts will help you move forward.
In addition, you’ll get used to the requirements and ways of buy and sell operations. So, for example, if you’re going to buy a contract for differences (CFD), you don’t have to look it up since you’ve done it in a demo account.
2. Be familiar with the functions
Different platforms offer various functions, so if you’re looking for the right platform to use for your investments, you should try them and see if they have what you’re looking for. Nowadays, brokers have the latest form of trading platforms, such as MetaTrader 5 and MetaTrader WebTrader.
However, aside from the trading platforms, the main website of your broker should be also high-end. So when you encounter some problems in the future, you can easily chat with their customer service representative.
Besides, when you open a demo account from a platform, and you can understand anything about it, it’s easier to move on to another. Unfortunately, if you directly sign up for an account and paid for the fees, you might instantly regret it.
3. No need to risk actual money
Are you afraid to lose some money with trading? Don’t worry, by setting up a demo trading account, you’ll not going to lose money. Of course, it’s advisable to trade based on your actual techniques. Besides, it’ll enable you to get the right results, so that you can have accurate trading once you go live.
Although having demo accounts doesn’t require investing real money, it can still affect your emotions. Additionally, you can perceive it as a sign that you’re not yet ready to trade. So whether it’s actual or demo, your choices can still affect you.
Fortunately, when you get used to the feeling of having negative results, you can monitor your emotions.
4. Create strategies
Since trading on demo accounts can give you enough knowledge and experience, it can also enable you to create strategies. If you’re a beginner, you need to make strategies that suit your trading pattern. On the other hand, if you’re a professional, maybe some of your strategies no longer work, so you need to devise a new one.
Meanwhile, if you want to try other traders’ strategies, you can do so by running it with your demo account. The good news is no matter how many times you try and fail, you’ll lose nothing since you didn’t actually invest.
5. Discover possible risks in live trading
You may already know the basic risks of trading, but you can also discover more when using demo accounts. If you have trading habits that prevent you from earning money. You can find a way to change them using demo accounts. If you acknowledge your unhelpful habits while practising, you can also apply them to actual trading.
When you discover more trading risks while using the demo version, you can also control your emotions and other impulsive decisions you can make. And once you can tolerate your emotions, it can be the first step in your journey of trading for different markets.
When you utilise free platforms even if you have prior knowledge, you’re not wasting your time. Instead, you’re helping yourself up improve and get back in the game. However, it doesn’t mean that using a free demo account is a sign of weakness. It can also mean that you’re just making sure that you’re strategies are working.
So the next time you hear or read someone shaming traders who use demo accounts, just don’t mind them. Continue working on yourself and your trading strategies to earn more. Don’t forget to share your tips for maximising the use of demo trading accounts by leaving a comment below!
ABOUT THE AUTHOR:
Aliana Baraquio is a web content writer at FP MARKETS, a global Financial Technology services Foreign Exchange (Forex) and Contracts for Differences (CFD) broker established in 2005. She also loves reading about interior design and home makeovers.