In order to make trading on the exchange market profitable, a trader needs to increase his theoretical knowledge and gain practical experience. And if with theory all is simple enough: there are a lot of appropriate materials even in the open access, then the question of practice is not so obvious. One of the easiest solutions in this situation is to open a demo account. We are going to tell you why you need a demo account, where and how you can open it, and why it may be useful for both beginner and experienced traders.
Why do I need a demo account?
This question can be answered with the help of a definition. A demo account is a trading account that has practically all its facilities, but does not require any financial investment. After its opening, the trader receives a certain amount of virtual currency, with the help of which he can conduct any trading operations at current quotes, but without any real financial risks. A demo account can be operated using the same trading platforms as a real one.
In this case, a demo account will allow you to safely get the basic practical experience in buying/selling any exchange assets and market analysis data provided by the trading platform, and then move smoothly to operations with real money.
You can highlight the following advantages for beginner traders:
- you can open a demo account in a couple of minutes,
- It is free of charge, and no deposit is required,
- you will gain real trading experience without any financial risks,
- one can easily get to know the way of working with each financial instrument,
- operations with virtual money completely exclude the factor of psychological pressure and stress, and allow a sober assessment of the situation.
Advantages of Demo Account for Experienced Traders
Experienced traders also often use a demo account or even several accounts, but for a different purpose. In addition to standard strategies of asset purchase and sale, many experienced traders analyze market situation and develop their own trading strategies. By no means always these strategies turn out to be correct, and in order to test them without risk for the real account, they open a demo account. Only after the strategy is worked out and proves to be effective, it can be applied to real assets.
The second advantage is the training of technical skills. Because trading on the exchange, a delay of just a few seconds can result in serious financial losses or lost profits, it is very important to be able to work with the trading platform, without wasting time in thinking and searching for the right menu items. Using a demo account allows you to bring the basic steps to automatism.
Where and how you can open it?
Just like a real investment account, you can access your demo account from your broker in just a few clicks, by filling out a simple form and using your username and password for the trading platform of your choice.
This is extremely convenient because a beginner does not need to make an initial investment, sign documents or leave the house. At the same time, from the very beginning traders will be able to evaluate the basic aspects of working with a real broker, and later, when proceeding to the first “real” operations, use its services to open a real trading account.
In addition, with the demo, many brokers offer access to a web platform, through which you can immediately test the possibilities. One last thing: when choosing a broker to open a demo account, be sure to pay attention to its capabilities and the list of available exchanges.