Demo trading is one of the blessings of Forex trading system. They allow the interested traders to learn the art of forex trading with free of cost. As this market is very unsuccessful for most of the traders, it is necessary that a demo trading system exists in the Forex to attract the potential forex traders. But like all other things, demo trading has both good sides and bad sides. If you have thought demo trading has only good sides, you are wrong. Sometimes, partial knowledge cannot give us the idea of the whole scenario of a certain event of the financial market.
Good side of demo trading
Practice: It is the basic of demo trading account. In demo trading, you can practice with your heart’s content. Here, you open an account for free and practice trading the live feed of the financial market provided by your broker. What more can you expect from a forex broker after it provides a demo trading platform for free to master the art of trading. In the eyes of trained profession it is one of the most lucrative features for the novice traders.
Test your strategy: You may have a new strategy in your mind but could not be sure if it is the right strategy. Demo trading gives you an upper hand, allowing you to test all of your curious mind’s strategies. Remember in mind, demo trading has no risk involved and therefore, most of the traders test their new strategies in demo account even if they are an expert. So if you want develop a trading strategy in the financial market then your demo account can help you a great deal.
Monitor trade performance: If you have opened a real account and lost all your investment overnight, not many people will be interested in Forex. That is why, in a demo account, you can monitor your trade and learn the real art of trading. Though the trades are not real, but the signal that you depend on and take your decisions based on them are real.
Bad sides of demo trading
Partial knowledge of Forex experience: In demo account, you only get a partial knowledge of the Forex experience. Even if you have a small 10-dollar in your real account, you cannot get that experience from 1000 dollar demo accounts. Your knowledge of Forex is incomplete without stepping into the real world since you won’t learn how to control your emotions in the market.
Dramatic goals: Most of the traders try to set a dramatic goal to cover their loss of the previous trades. Eventually, these unrealistic goals and mind plan became a habit which they carry all through their trading career. So when you use the virtual dollar in the forex market make sure that you trade with proper risk management factors.
Summary: You may think that trading in a demo account is not the best thing that you should do but that is not true. As long as your real money is not at stake you can test different trading strategies and learn the art of perfect execution of the trade.