Trading in the Forex market with no prior knowledge and understanding of how it works is a sure recipe for failure. Even when you are fully equipped and have the required knowledge, it won't hurt to practice more because there is always room to improve. Entering the Forex Market via a Demo Account is an ideal way for novice traders to find their bearings without risking their money. Plus what better way to size up the market, its variables, and your trading platform (get comfortable with the settings, indicators, various order types, charts and so on) all in real time where you don’t have to worry about the risks of losing? In a Demo Account, you can work on the things that would make a huge difference in your trading career; for example, how to be patient or how to hit the market with new and better strategies so you can earn more profit and at the same time minimize the risks. Think of the demo account as your crash test dummy whose sole purpose is to let you know where your weaknesses are and how to improve them. So, it doesn’t matter how much damage you’d do while demo trading, the whole thing does not even cost you a dime! This is where you can get it all out of your system before going live. When you try different ways in a safe trading environment, you see firsthand how the market is supposed to work, and therefore, you can adjust to it accordingly.
👉 Advice on Using Demo Accounts
Nothing is flawless and demo accounts, despite their many advantages, are no exception. Demo accounts run on virtual money, this means no amount of loss can bring you down financially (even 10s of millions of dollars). Novice traders might get caught up in the demo trading vibe without sharpening their senses to avoid losses (since there is no fear of losing, the trader knows that it is going to be okay!) and when they apply the same mindset to the real market, that’s where things go very wrong, and significant losses occur. Not being seriously at risk of losses might have its advantages, but it also can be the cause of your downfall sooner rather than later. $10,000 virtual money sounds just like a number since it has no value, but even 1/10 of such amount from your pockets can throw you off balance and ruin your overall mentality, something that you really need while trading in the Forex Market.
In a demo account, the trading conditions are a little too perfect which means this simulated environment does not factor in some important variables such as slippage which could affect the prices in a real account. The same applies to the order execution; there is not simply a way for you to know that a successful order in a demo account can even be filled in a real account!
The best way to make the most of a Demo Account is to calculate your financial capacity carefully and go with the amount you can afford to invest in a real trading account. Just because you can trade bigger in a demo account, it doesn’t mean you should, if you want realistic results, take everything into account and invest realistically, it makes quite a bit of sense, doesn’t it? The Demo Account is free undoubtedly, but if you don’t use or practice Patience and Proper Risk Management in a safe environment such as this, how can you trust yourself to do it in a real trading environment while facing the constant volatility of the market?!
You might think to yourself that “if I can make lucrative trades in a demo account, then I’m all set to enter the big game.” Unfortunately, that’s not how it works. You see, trading successfully in the unpredictable Forex Market requires your full attention, consideration of all the factors, and having your emotions in check; otherwise, it’s game over before it even begins! If it helps, think of the virtual money as your hard earned cash in order to know how you’d react if it actually were your own funds! Trade in a demo account as much as you need before thinking about joining the real market, and even then you should not rush into anything. Remember, if you trade realistically in a demo account, your chances of having a better handle on your trading strategies will improve immensely. When you feel confident enough to move forward, go with a Micro Forex Account in which you can trade in smaller sizes and therefore encounter fewer risks! (Smaller but Smarter!).
