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The advantages and disadvantages of demo accounts in Forex
Demo account for Forex trading is the opportunity offered by almost all forex brokers to their potential customers. Due to this, brokerage company intend to make to potential clients positive impression of the level of his trading service and clarity of support - in the hope that eventually customers will open their real trading account. But regardless of what motivates brokers, offering the possibility of using demo account, their motivation is irrelevant to their future clientele.For them it means having tool that will allow future traders the shortest and painless way to acquire the skills of Forex trading and master the techniques and tools that are available in the trading terminal used in Forex market.
In other words, if brokers consider demo accounts as a marketing tool to attract more clients, traders have the opportunity to practice on these accounts in a real market. Traders view these accounts as an inherent attribute of trade practices, without which they can not do, because it gives them invaluable benefits, including the following:
• It's absolutely free, you only need to specify a real email address. In exchange, the traders get the opportunity to practice trade in real time and get familiar with various trading platforms.
• Traders learn how to execute a trade transaction, acquire skills for risk management without placing their money on Deposit, and watch the impact of price fluctuations on a trading account in real market.
• They are able to create, debug, and test various trading strategies in a "real" market and using a full-fledged trading terminal without any restrictions, without risking their capital.
• Traders are familiar with the characteristics and nature of the foreign exchange market and can then adapt their trading strategy.
However, in the demo Forex accounts there are still significant drawbacks:
• Doubtless the fact that the demo account help to hone the skills of sensible and appropriate ways of money management. Usually, the amount of virtual funds in a demo account intended for "fictitious" trade, default is 50 000$ 100 000$. Such a large amount of capital is hardly realistic for the novice trader who is planning to start trading with mini or even micro account.This situation encourages the trader to choose a more risky trading style for virtual trading, which is unlikely to be suitable for a small size live account - in this case, excessive risk can become a habit, harmful to rollover the trader on a live account.
• Second, trading on the real market with virtual money, You are sure that never and nothing to lose. However, You will not be able to experience the feeling of the inevitability of the consequences of already committed Your trading decisions, hard moral pressure, which is inevitable when trading with Your own hard-earned money. Without a credible threat of parting with money or the perception by the trader risks is actually scattered and weakened.
Forex demo account, no doubt, will be very useful in honing the technical skills of the trader, but the trader is not experiencing the difficulties associated with making trading decisions that attract in agreement to his real money, and the pain of losing substantial funds in a live trade, he will not be able to fully assess the real risks that accompany trading on Forex.
|Category: Forex | Added by: (29.10.2017)