Trading in financial markets is very profitable, but on the other hand is a very dangerous business. Therefore, let's immediately note the statistics in which 8 out of 10 traders lose their money. That's how the world works, there's nothing to be done. In all areas of our lives, in any industry or country, the statistics are approximately the same. The strongest survive, only successful people remain. At the beginning of their trading, many novice traders ask themselves whether it is worth opening a demo account or immediately switching to a real one? Let's look at this issue and consider what a demo account is and what its advantages and disadvantages are.
Demo account this is a practice account, 90% similar to a real one with the same quotes and tools. But the trade here is fake money. Therefore, many say that the demo account is relaxing and does not allow the trader to feel the market. Opening a demo account is carried out within 1-2 minutes. This can be done on the broker's official website or in the trading terminal itself. When registering, data are entered Full name, account currency, server, amount, etc.
Why should a trader have a demo account:
To get acquainted with the software and market features. You can study charts, observe the market, analyze various securities;
To get acquainted with the trading instruments that you will trade. If you are a beginner and do not know how certain currencies move, this will be useful for you;
To practice their tactics. This is very important, as in real life trading for real money there is simply no time to think about actions. Everything must be planned in advance;
To test your trading strategy. If you trade one good trading strategy and you need another strategy, for example, to trade in the short term or long term. A demo account is perfect for you, as it will let you test the strategy and find out what you need to refine and what to enable.
The dangers of trading on a demo account
Since you are trading with virtual money, you are dulling a sense of responsibility for money and for mistakes. Many pour 1-10 thousand dollars and say: think, I will open another account;
There is no pressure and emotional stress. The trader becomes inattentive and distracted.
On a demo account, orders are opened very quickly and efficiently. But on the real account, transactions are executed in different ways, there are slippages and gaps. Some brokers can cheat on their traders and cheat.
Advantages and disadvantages of a demo account
An account is opened in seconds and does not require identification;
The demo account is free, you do not need to replenish it. When registering, simply enter the desired amount of money;
Comfortable conditions for honing the trader's skills, including strategy.
Demo account has no expiration date. You can use it as you want;
Lack of risk is both a positive side and a negative one. Since you do not risk real money, you do not treat trading as a business and trade relaxed.
Disadvantages of a demo account:
A trader is trading on virtual money. And this, in turn, does not make the market feel. It's like playing a monopoly or not real money poker.
- not real money has been put at stake;
- there is no risk of possible losses;
-If your deal is losing, you won’t feel anything, because you don’t lose anything.
A real account is a serious matter. There you feel your real emotions that you are trading. Such as:
-the fear of losing money;
- doubt (if the market is going the other way);
Therefore, I always tell friends and acquaintances. If you want to know yourself 100%, open a live trading account for 10 thousand dollars and bargain.
No sense of real loss
Those who traded on a real account know and understand how the market is moving. About 5 years ago, when I was a beginner, I followed almost every market movement. I especially watched when the position was against me. Seeing -10, -30, -50 points, I strained. Then I traded 1 trading lot and saw how my dollars flew into the pipe. I felt angry when I got a stop of $ 100-500. And now the main question: Can you feel something after losing money on a demo account. I think not, since this is not real money - this is not a bank account, this is a fake. Therefore, you do not have feelings of losing money when trading.
The feeling of loss is a very important feeling in online trading. And the faster you feel it, the faster you will understand the market. To grow as a trader, I am 100% sure that you first need to lose, and only then earn. They say that you sow, then you shake.
Fake Demo Accounts
With the development of online trading in the financial markets, more and more brokers are appearing. And not all of them are honest in their activities. Many brokers make demo accounts more successful and beginners who have traded on a demo account think that making money in the market is easy. The most common ways to cheat traders on a demo account:
-successful trading demo accounts;
- lack of slippage;
- moderate volatility;
In real trading, the opposite is true. Financial markets are unpredictable, anything can happen at any second. Today, in the 21st century, a huge number of factors influence markets. Therefore, I think it’s not worthwhile to find out the reasons that affect the market. The real market will show its character.
If you have been trading in the financial markets for a long time, you probably know that successful traders are strong people by nature. The philosophical stone here is the psychological factor. The rest depends on your aspiration and adaptability to the market. Technical analysis and development of a trading strategy are glued together on a strict discipline. As a rule, many traders cannot control their essence. According to statistics, out of 10 traders, they earn only the second. Therefore, be vigilant and work clearly.
The less you engage emotions in trading, the colder your head will be and your profits will be greater. Thanks to this, with each trading session, more and more transactions are concluded, against which there are more and more profitable ones.
As a result, we can say that a demo account is a good tool for preparing a trader. If you are a beginner, we recommend that you first trade on a demo account for 2-3 months, so to speak, feel the market and test the strategy, and only then switch to a real account. Do not linger on a demo account, as it has many negative aspects, one of which is the lack of emotions. Successful trading and profits.