Ever
wondered why so many people and forex traders use forex demo
accounts? What is so special about these demo accounts? Well, there
are a a lot of things that you need to know about forex demo
accounts. There are thousands of brokers that offer demo accounts
like avafx demo account, alpari demo account, fxcm, plus500
and many others. Let's see what are the benefits of these demo
accounts and why forex brokers offer free demo accounts to their
traders.
Benefits
of forex demo accounts
One
of the main functions of a demo account is to learn what is still
unknown. For new forex traders, they can learn a lot of things from
their demo account. A demo account is like a very first stage for
them. What they can learn? Well, new traders can learn different
concepts, forex terminologies, how market moves, how prices moves,
how to use forex charts, how to use fundamental analysis, how to use
signals, how to use trading platforms, how to trade, how to place
orders, how to read technical charts and a whole lot of different
new things that are related to the forex market.
Experienced
and professional traders also use demo accounts for learning
purpose. I mean, when you know nothing about a broker, how could you
risk your capital? So those traders who are experienced ones and
want to switch broker, they use demo account for a short period of
time to see whether they will fit in or not. These traders view
broker services from an advanced technical view rather than a basic
overview.
A
forex trader, a relatively new forex trader, operates demo account
without any fear of losing money. Since these demo accounts are free
and do not need any funds rather the money used in demo accounts is
virtual money. Brokers offer their traders with a very high virtual
limit some times up to $100,000,000. So as a trader, you can freely
trade with such a big amount especially when there is no “fear of
losing money” involved. This way, you can actually judge your
skills or I must say trading skills because in the real market when
you trade with real money, you have fear of losing money in your
mind and this fear make things worse for you. Trading under pressure
of fear and trading without any pressure are two different things.
So to judge and evaluate your trading skills, and to see how you
behave while trading with virtual money, you need a demo account.
Then you need to polish and use these skills in the actual market
while trading with real money.
Apart
from learning, a demo account is indeed very helpful for those who
want to trade in the real market without investing or losing their
money. I mean, if you are curious as a finance student as to how
things work in the actual forex market, you can use a demo account.
So it is not necessary that you use a demo account only if you plan
to convert it into a paid one – no. Anyone can use demo accounts
and can explore the actual forex market.
As
a trader, forex demo account will help you in case you want to
practice a new strategy or if you want to see how effective is a new
strategy. And it is recommended too to always practice a new forex
strategy, that you are trying for the very first time, with a demo
account. This will keep you safe from losing money. It is very risky
and unwise to use a forex strategy for the very first time at your
forex account without practicing it. And for practice, you must use
demo account, not your original account.
Forex
demo accounts are also very useful for small traders who are trading
with sheer capital and want to invest a large amount of capital.
They can actually use demo account to see how good are they with
large trades and lots. There is a lot of difference in trading
strategy when you trade with $5,000 and when you trade with
$750,000. So those traders who want to fund their account with more
capital normally use forex demo account with fairly high limits to
see how they manage and trade with high limit and lots.
Last
but not the least, demo accounts are beneficial in case if you want
to try new things. For instant, if you want to try a new trading
platform, you can use a demo account. If you want to try a new
technical chart, try demo account. If you want to see the strength
of a forex signal, try a demo account.
Almost
all the best forex brokers offer a free forex demo account.
Most of them offer it for 30 days. Now that you know (I assume) that
what are the benefits of using a forex demo account, I suggest you to
keep using demo accounts every now and then to try and learn new
things. The more you will try, more you will learn, and learning will
make things much easier for you in the long-run.
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