The demo account in the forex industry is like the simulator for airline pilots because just as pilots can practice flying a plane and ‘crashing it’ as many times as they can when they are practising to fly a plane without the risk of killing anyone or damaging a multi-million dollar aircraft, so in a similar way, forex traders can use the demo account as many times as they like without the risk of losing real money.
The bad thing is that a lot of people essentially think that you are playing with fake money if you trade with a demo account, and this is not necessarily true. The truth is far from the myths because a demo trading account is an integral part of forex trading if you want to be a successful trader.
If done in the wrong way, then trading can make you suffer. You may end up losing lots of money and make a decision that trading is not for you. But, rest assured that a trading account is the perfect solution for you.
Here are some key reasons why demo trading can save your face and prevent you from losing everything:
Saves you Money
If you have been trading for a short time and want to win big bucks quickly then you are in the wrong. Forex trading is a game of patience, persistence, and perseverance. You should only trade in a demo account so that you can become a profitable trader before you end up risking your own capital. There is simply no reason to trade on a live account when you don’t have enough experience trading. It would simply be trading suicide.
By opening and trading in a demo account, you are saving a lot of hassle, you play safe, and you reduce the money you lose from your mistakes.
Saves you Time and Effort
You will save a lot of time and effort by trading in a demo account the correct way. But what is the ‘correct’ way?
As I mentioned that forex trading requires a lot of patience, and your time is valuable. A lot of traders commit a lot of time and hard work when they are trading. When you are practising with a demo account will make you better at forex trading and in this way you will waste less time when you are trading on an actual account. It is better if you spend a long time on a demo account than spend a short time on a demo account and then run and open a live account, only to return to the demo account again because you were unsuccessful.
If you jump in to live trading and experience heavy losses, you are most likely going to quit. The worst part is that psychologically, you are most likely going to be feeling down, and this can be bad for your moral.
So, the best practice is that you take your time and understand your own psychology because in the long run, you will be on the course to becoming a solid forex trader.