The Benefits of Demo Account Trading
Whether you want to trade forex crypto currencies, the stock market or anything in between, the simple fact of the matter is that if you have never traded before and you have absolutely no experience, chances are almost 100% that you are going to lose all of the money that you invest. For this reason, many people will try doing demo account trading, or in other words, trading with a demonstration account.
As you can probably tell, demo accounts trading is a great way to get practice in. So once you start trading with real money, you actually know what you are doing, thus helping you to minimize the risk of losing your money. Of course, the fact here is that trading is not easy and this goes for all types of trading. It really doesn’t matter if you engage in trading, that only lasts for a single day or a full year, or if you are a cryptocurrency, forex or stock market trader.
The unfortunate reality here is that most people who start trading without any prior experience or practice end up quitting after just a few weeks because they lose all of their money. However, this is what we are here to help you prevent. We don’t want you to stop trading because you lost all your money and we definitely don’t want you to lose any money. Today we are going to go over the benefits of demo account trading and exactly what this entails.
What Exactly is Demo Account Trading?
Alright, so something you might be wondering is what exactly demo account trading is and what the demo account is at all. Now when you go to trade, you of course have to use a broker or a trading platform. Sometimes these trading platforms are standalone platforms and sometimes brokers come with their own platforms. However, what is important to note here is that all of these platforms generally come with a so-called demo account or demonstration account.
As you can probably tell, this is like a practice account that you can use for free without any cost and without having to risk real money, so you can then decide whether or not the platform in question is worth using. For those of you don’t know it demo account trading is all just about allowing you to trade in real time and under real market conditions without having to put real money on the line. These demo accounts use all of the same information and analytics as live accounts. Use with the only difference being that here you are using fake money instead of real money.
It’s all about being able to trade with virtual money, so you can practice using trading platforms and you can practice your trading skills all without having to risk real money. At the end of the day, it’s all about providing you with the tools, skills, and knowledge that you need to be a quick acting and profitable trader. This is really no different than when a pilot uses an airplane simulator to practice his or her piloting skills.
The Benefits of Using a Demo Account
Just something that you might be wondering here is why you wouldn’t just start trading with real money on a live account. After all, if you want to make profits, then you do have to invest real money. As they say, it takes money to make money. So what are all of the benefits of using virtual money to trade on such a demo account?
- One of the biggest benefits that you need to be aware of is the fact that you will learn how to use this specific trading platform in question. The fact here is that not all trading platforms are alike. Some trading platforms are very hard to use, while others are very easy to navigate and are designed for newbies. Doing demo account trading is a great way to figure out whether the trading platform in question is right for you.
- Another huge benefit that you get with DEM counteract trading is that you can practice your own trading skills. Of course there are many different facets of trading that you need to master in order to be profitable. You need to know how to read charts. You need to know how to use indicators. You need to know what time frames are best to trade at certain times of day and for what. These are all things that you can practice when using a demo account.
- Yet another benefit that you get with using a demo trading account is that you can decide what type of trading is best for you. There are many different types of trading. There is scalping trading, which involves trades only, being open for a few minutes or hours. There is day trading or intraday trading that involves trades being open for less than a single day. There is also swing trading that involves trades being open for anywhere from a few days to a few months. Doing demo accounts trading will allow you to figure out what type of trader you are, an what type of trading is best for you.
- Yet another benefit that you get with demo accounts trading is that you can figure out what market is best for you. In case you didn’t know, trading Forex is not the same as trading crypto currencies, and that’s not the same as trading the stock market or trading commodities. Using a demo account to practice your skills will allow you to figure out what type of trading is best for you, and what market you want to trade on.
- One of the biggest benefits that you get from demo account trading is that you can also master your risk management skills. Of course, risk management is by far one of the most important things that you need to master if you want to be a profitable trader, and this is true no matter what market you are trading in or what type of trading you are engaging in.
Some Quick Tips for Demo Accounts
- Figure out what your trading method and style is, what markets to trade, the timeframes to trade on, when to exit to take profit, when to exit to stop losses, and how to apply position sizing. You should do this before you start trading, because if you master this for your practice rounds then you will definitely be ready for live trading.
- Remember that an efficient trader always has a solid routine. Most people are going to check the economic calendar and do some analysis early in the morning and then place their trades. Most people will then have their trades open for the majority of the day and will then perform end of day analysis when the market closes. Whatever your routine is, you need to have a solid one so you can stay on track.
- What is also important to note here is that although spending a couple of months doing demo account trading is important, you don’t want to spend forever using demo accounts. The reality here is that if you spend too long using demo accounts, you might get accustomed to just being able to reset the account. The bottom line here is that people just don’t react the same way to losing virtual money as they would to losing real money. To get a few for what real trading is like, you have to actually trade. Keep in mind that in order to make profits, you actually need to be doing live trading. Demo account trading isn’t going to put money in the bank.
The Bottom Line on Demo Account Trading
If you want to hit the ground running and you want to start off on the right track, then we definitely recommend doing some demo account trading before you risk real money. It’s an easy and totally free way to practice your trading skills and to master using various trading platforms.
If you need help day trading, and what you need is a comprehensive education, particularly on Forex trading, then the best place to be is the Income Mentor Box Day Trading Academy. At this time, the IMB Academy is the most comprehensive, user friendly, effective, and affordable Forex trading school out there.
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