Demo trading is a practice account in which everything is real trading except the money. You have a pretend balance that goes up and down with winning and losing trades exactly the way a real account does. This is an excellent way to see if you would profit in real trading. I challenge all new and old traders that don’t make money to trade with a demo account for 3 months and see if you make a profit. If at the end of three months you are not profitable you are not ready to trade with real money.
Demo trading is free with many brokers and the trading is done in real time and you cannot tell the difference between demo and live accounts. I use demo accounts to test new strategies and to see if I can make adjustments to my trading. Why risk real money if you are just going to lose it? If you are not 100% certain that your strategy works and you are disciplined enough to carry it out than you are just gambling and that is foolish. Anyone that is successful at anything in life spends time training, learning and perfecting their skills. Professional athletes don’t just go straight to the top they have to move up through the ranks and that takes years of practice. The same concept is true in forex trading.
Using a demo account also helps you become familiar with a broker and trading platform before you jump in with real money. You will want to know the ins and outs of the broker before you begin. It is important to know how their stop losses work and about their spreads. Demo trading teaches you how all that works with each broker. When trading with real money you had better know how to make trades and what button does what. The time to learn is with a demo account so you can adjust and learn and the mistakes you make will not be costly ones. I find that it takes me a couple of weeks trading to learn a new platform, give yourself time to become familiar with the platform.
So take the time and learn with a demo account and don’t blow a real account. Don’t think that you are a superstar and that you will defy God given laws that say a person must train to be successful, If you think like that than you have already failed. If you learn to trade the right way by training and work ing demo account, than in the end you will reap huge rewards.
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