Practicing on a demo account is a must for successful trading. What is a demo account and why is it useful? Read on for the answer.
Professional traders owe their skills to hours of practice - that sometimes result in failure. The fear of losing money is the main thing that holds back would-be traders. Fortunately, novices now have the opportunity to practice on a demo account before actually taking the plunge. This allows them to learn the basics and become experienced traders without risking their funds.
A demo trading account is a simulator that allows you to make virtual trades in real time. Many platforms, including eToro, offer demo accounts that you can access simply by registering. Demo accounts are aimed at beginner traders, enabling them to learn trading practices and develop their strategies.
However, more experienced traders can also use demo accounts to perfect their skills and test stock market analysis. Experts can also learn to anticipate trends without risking their money.
A demo trading account is designed to teach the basics of real time trading via simulations without the risk of losing funds. The fear of losing money can cloud novice traders’ judgment. Demo accounts provide a favourable learning environment while keeping real funds safe.
Demo trading accounts provide a comprehensive learning environment. Users benefit from all the functionalities of a real account by trading simulated funds, carrying out analysis and then making investments according to the strategies learned. Depending on the results, the trader can then refine their strategy and acquire valuable tips.
To enable beginners to progress in trading, demo accounts include several features.
Graphic analysis is essential before making a trade. Market curves allow traders to identify trends, define the investment horizon and the amount of the investment.
Depending on the analysis of the charts, the account user can choose between one-off, progressive or regular investments. A demo trading account provides real market prices and allows users to learn how to interpret them and test their findings straight away through virtual transactions.
On a demo trading account, the user has the same indicators as on a real account. These are essential for both technical analysis and trading. These indicators help to identify the best opening to enter a market by making a trade. Familiarizing oneself with these indicators is therefore crucial in order to make good analyses and anticipate maneuvers.
Assets behave differently in different market environments. Some Forex currency pairs may show an upward trend during a trading session on Wall Street, while others may show a downward trend. Sometimes, no trend can be defined.
It is therefore essential to practice on a demo trading account to identify possible correlations between assets. With practice, the trader will be able to recognize market conditions that lead to certain trends.
A demo trading account allows you to enjoy a risk-free environment and gain valuable experience. But it is necessary to recognize the right time to switch to a real account.
Often, traders are so used to making virtual trades, that thinking about investing real funds seems daunting. Learning time on a demo account should be limited.
Generally, it is recommended to train on a demo account for 6 months max before switching to a real account. The switch between accounts should take place gradually and should involve small amounts of money to start.
Several brokers offer demo trading accounts. These include:
This online broker offers the best platform to learn trading. Its demo trading account allows you to take advantage of a virtual fund of $100,000 to try out your strategies as you see fit. eToro also stands out for its large social trading community. Members can help each other, exchange experiences and take advantage of copy trading solutions. Users can automatically copy the strategies of the most talented traders and connect with them.
Suitable for both professional traders and beginners, Avatrade is a trading platform with several licenses. It offers regular training and comprehensive analysis tools alongside affordable brokerage fees. Avatrade’s demo account offers $100,000 of virtual funds that can be used to trade CFDs, Forex and other financial products.
XTB offers a demo trading account for a risk-free start. Perfect for both beginners and experienced traders, it stands out for the choice between a standard account or a professional account. In addition, there are no account opening or maintenance fees. The demo account offers a virtual fund of €20,000.
FxPro offers a demo trading account with renewable virtual capital with no time limit. After your first deposit, you are offered €500 of virtual currency that you can use to trade cryptocurrencies, Forex, or CFD. The FxPro demo account is available in its mobile app.