In my opinion, it is extremely essential for all novices to begin with demo accounts and learn the basics about currency pairs, software, and learn about risk and money management strategies. Even though it doesn’t guarantee profits in a live account, it is still essential for the overall growth of a trader.
Even despite using demo accounts, many traders fail in forex trading due to lack of right psychology and risk management. Demo accounts can still be very helpful to those who have nil experience in the field of trading. I agree that trading is all about risks, but the risk isn’t worth it if you have ZERO skills. Inexperienced traders can use demo trading to create strategies. You can move to a real trading account once you have some skills.
It depends on the person only. But to understand the market patterns and how the market behaves, how it reacts to support and resistance, NFP, News it is always better to try on Demo account. But for money management and test to your real psychology you need to put real money which you are ready to lose without any pain.
Demo trading is extremely important when you are a beginner trader and want to understand how this 6 trillion Dollars forex market works. This is just like learning how to swim in a pool before diving into the ocean. I have practised a demo on fxview mt4 for 10 - 11 months which made me notice the whole different practical approach as compared to what I have read. Demo trades really give you a nice exposure and must not be skipped when you’re thinking about entering the forex market.
Trading psychology is critical in a trader’s journey because it impacts trading decisions. So a micro account is a good place to begin for traders. But what is the point of directly trading live if you are neither familiar with the trading platform nor have the skills? Demo accounts are not perfect; however, they are good for inexperienced traders to develop some understanding of the market. New traders should trade with micro accounts once they have some clarity of the market.
James_Bond posted: I will clarify; the point of a demo account is to get a feel of forex trading, however it creates the psychological illusion of not caring of any losses/wins and taking enormous risk without having to confront consequences (psychological side).
See I fundamentally disagree with this. Too many do but this is entirely choice. I always treat a demo account as if it were real money as this helps me from good risk management habits. I don't demo with money too out of line with what I trade live either. Habits are the result of repetition and I never bought that these can't be formed on demo ultimately risk free. Why treat it differently to live? Of course it IS different but if you can get used to the numbers on the screen on demo then you will feel more numbness to them when live. At least that's how I worked it and it made sense to me. Using a demo and treating it like it's risk free reinforces bad behaviours that will only make it harder to rectify when live.
If you can't spot the liquidity then you are the liquidity.
Agreed with the poster above its vital you treat it as a live account will have major benefit to your trading. If you see it as pretend then you lose the psychological downer of losing you need to treat it as real for it to benefit you
Demo accounts are mainly meant to make traders aware of the platform and the working of the market. They do not develop the trading psychology as real money is not involved. I believe that a trader should not spend more time on a demo and as soon as he finds his strategy is working, he should switch to a cent or micro account. Switching to the cent or micro account allows traders to work on their trading psychology without risking a big amount.
using a demo account until you’re comfortable with your progress. Then you could dip your toe into a small live account to learn how to control the emotional reactions to both losing and winning trades.
It’s important to know how crucial features like stop loss orders, leverage, strategies, etc. work before you start trading in the live market. That’s what you must use demo accounts for. It may not guarantee success while live trading, but it surely helps in developing skills and understanding that help in the live market.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors.
Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.
Past performance is not indicative of future results.