As per the writing on the wall, there are numerous ways of preparing yourself before entering into forex markets, practising on demo accounts is a method that has always been debatable since earlier times. The use of practice accounts is loved by some while hated by others. In true fact, a practice account is nothing but a good thing that lets you refine your trading strategies.
However, there are some pitfalls too associated with demo accounts. Let us take a look at both the benefits and cons of opening up practice or demo accounts.
Basic accounts
First, let’s have a look at the basic practice account and its features. For those who are not aware, the free practice account does what exactly it says on the tin- it lets you practice currency pairs trading for free. This sounds really convenient for a newbie trader and it surely is in many ways.
Demo Accounts
There are numerous brokers offering a free Forex demo account to help people develop their interest and enthusiasm in Forex. Thiers nothing wrong with this practice as brokers have always existed to expand the number of traders in the market and on their own platform allow them to try their trading techniques. Furthermore, it is always a great methodology for the new trader to begin learning the basics of forex trading without even risking his capital.
You can try making a Forex Demo Account here.
Benefits of demo accounts in forex
Currency trading in forex is not a simple task. Several brokers introduce no-frills platforms with minimum low deposits to get the virgin trader to initiate trading. Certain brokers have moved a step further by allowing people to open a free practice account where they can start trading with make-believe money until they acquire the confidence and knowledge to risk their own precious income.
This is where the major benefits of the practice accounts reside in being able to advocate the forex market about the key functions of trade without risking a cent.
The demo accounts- the downside
As every coin has two phases, demo accounts also have a negative aspect. When trading with “virtual” money, the risk is less. In fact, there is not a single percent of risk associated. The account holder has an endless stream of unreal money which makes them play trading in sandbox mode without any challenges and rewards. This generates a world of imagination and it lulls traders into a false sense of being one hundred percent secure.
The future of the forex market and demo accounts
The forex market has recently become much more appealing than it was in ancient times. If you can make a huge amount of money in the practice area, you surely won’t disappoint yourself when trading with real money. Sounds good? Actually no, this is where the real forex world brings you down from the fantasies of being rich to the real world.
After achieving success in demo accounts, your confidence is high and you feel like you know what you doing. It is more likely that during this phase you plan on making a risky move with a huge amount of cash involved. As you make wrong perceptions and judgments about the trading graph, you lose your money and your forex career comes to the verge of termination.
To sum it up
The only way out of it is to take things slowly, analyze them carefully, and avoid making instant trading decisions. With self-control and an innovative mind at work, you can become a successful trader. Practice accounts are generally useful to gain an estimate of forex trends. They are only applicable if you carry out trades as you would do with real money. One should avoid making a trade in a practice account that he or she would not make with real cash. For practicing and developing skills in the forex market before even entering it, practice accounts are one of the easiest and most comfortable ways to get a knowhow of trading strategies while applying them in a real manner.
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