It is always a good idea for traders who first embark on currency trading to do demo forex trading before they start risking their own money. Demo forex trading is quite popular among traders for it allows them to familiarize themselves with the forex market, make mistakes and summarize trading experience without running up losses. Demo forex trading is beneficial to both experienced traders and novice traders. Forex traders need to fully realize the importance of demo forex trading in order to trade successfully.
What are the benefits of doing demo forex trading?
1. Free of charge
Doing demo forex trading is free of charge; this is because a great number of brokers provide traders with demo accounts for free. Traders can practice their trading experience and get familiar with forex trading platforms etc. without worrying about losing their own hard-earned money.
2. Getting trading experience
Forex demo account simulates the live account; thus, traders are able to experience how to do trading in a trading environment that is similar to live trading. Traders are able to watch the market movements, do forex analysis with various forex indicators and charts and make trades when doing forex demo trading. Traders are able to be experienced by doing demo forex trading.
3. Develop trading system
Developing a best trading system in a live account can be costly for traders need to try different trading ideas until they get the best system that is comfortable and profitable to use. A demo forex account enables traders to explore the strengths and weakness of a trading system without risking real money.
4. Get familiar with trading platform
Before using a live platform, traders had better use the demo version of the trading platform first; by this way, they can get familiar with live trading platform. They will know how to use the platform such as how to go from one interface to another and what the functions of the trading platform are before funding their real account.
When is proper to get rid of demo forex trading and do live trading?
Most of time, traders need to do demo forex trading for some time before they are experienced enough for live trading. But how to gauge whether it is proper to get rid of demo forex trading and start live trading?
1. Generate much more profit than losses when doing demo forex trading
Some traders decide when to get rid of demo forex trading and start live trading by defining how long they should engage in demo forex trading such as one month or six months or how many demo trades to make before they start live trading. Different traders might hold different ideas. No matter what standard to use, it is important to consider the profit and loss proportion. If the profit is much more than the losses, traders might consider starting live trading.
2. Be able to develop a proper forex trading strategy in demo forex trading
Developing a trading strategy is a crucial step on the road to becoming a successful trader. Whether a trader can develop proper forex trading strategy is another standard to decide when to start real trading.
3. Have better control of emotions
The ability to control emotions and detach emotions from the trading results is one of the most important things for successful forex trading. Thus, if a trader cannot control their emotions even when they are doing demo forex trading, they should never try live trading in order not to lose.