Demo accounts have no major disadvantages for a trader who decides to open a new one, except the fact that they will not help him earning real money if the trading strategy proves to be successful. This type of trading accounts simulates the real situation but without the risks and commitments.
Nowadays, all the main brokers are able to offer free demo accounts to both potential and actual customers.
The experience of the past has taught brokers that focus on training and practice is much cheaper than just throwing on the market. Furthermore, there is the need to meet the needs of customers who want to test quality and services offered by the platform before paying their money to a broker.
The first advantage of opening a demo account is certainly linked to the possibility to test your trading strategy without the risk of losing money. The strategies used in the equity market are not always good for the forex market, and the opportunity to work on real quotes with a demo account offers the possibility to adjust a strategy that does not appear to be adequate to the specificities of the currency market.
Another advantage is linked to the disciplined attitude that a demo account is able to provide to the trader that wants to learn and put into practice one of the main rules of the professional traders, or the objectivity and coolness without being dragged by emotions.
Furthermore, another advantage is the opportunity to build confidence and security in the choices of trading. In addition to greater confidence and knowledge of the platform and the entry and exit options from the market, the trader will be able to operate in the real market with greater confidence in his own ability after several tests.
Although they are not exactly replicable as in the case of real money, the accumulated losses on a virtual account have the advantage of not affecting the client’s portfolio, yet giving a valuable operational experience that is guaranteed from operating on assets listed in real time. Obviously, the virtual aspect of the demo accounts could be a limitation, as they do not allow the trader to perceive a real risk that lies within each operation, but especially because the trader will not be able to feel the psychological pressure that is often at the root of major capital losses.
As previously mentioned, however, the opportunity to learn for free all the secrets of the trading platform is not negligible. This option will allow the trader to customize the software according to his preferences so that he can get ready to find the moment to start trading with real money. The graphics are often the most difficult setting aspect and the time spent on a demo account will be valuable later on.
Usually, the access to the demo account is very easy for the trader. Just a registration with a few data, a download of the software (if necessary) which is followed by the crediting of funds used in the virtual trading. At that point, the trading can begin.