When starting to trade in the Forex market, a beginner should understand that he can both earn and lose a decent amount. Therefore, it is necessary to prepare at least minimally to conduct trade, because financial markets do not tolerate profane. The best way to get ready to work in the Forex market is to trade in the training mode, which is conducted on a demo account.
A demo account is a demo account that allows you to gain experience or hone your trading skills. Only after you have tested your skills on a demo account, you should move on to real accounts. But even in the event that you have consistently shown profit by trading on a demo account, you can sharply go into the negative on a real account. This is due to the fact that orders on demo accounts are executed immediately, but in real trading, your order will first go to the broker, and only then will it be executed. During this seemingly insignificant period of time, the market situation may not change in your favor.
A distinctive feature of demo accounts is the absence of risks. This became possible thanks to the virtual amount that the broker selects in the appropriate field before going to start trading. That is, the trader does not invest real money, and, therefore, does not bear real losses. Although everything else when trading on a demo account is real. That is, both currency quotes and price changes are broadcast in real time and are used by those traders who trade on real accounts.
A demo account is useful for both beginners and experienced traders. For the first, it is a great opportunity to understand how a trading terminal works, master the initial trading skills and learn to feel the behavior of the market. The latter, with the help of demo accounts, can test a new trading strategy developed independently, or test a ready-made one that they have never used.
However, along with the advantages, there are also disadvantages in the risk-free demo trading. One of them is the so-called psychology of the speculator. Since the trader is not afraid to incur losses, since money is virtual, he reacts to them quite calmly. At the same time, the profits obtained in virtual money can turn his head and speed up the transition to a real account, which often turns out to be a mistake, since a beginner was not yet fully ready to trade in real currencies. Forex market aces advise to trade in a training mode for 2-3 months, while they recommend making notes in the trader’s diary, where you need to record all the transactions made and the results to which they led. Subsequent analysis of the records will make it possible to draw conclusions that will certainly be useful in further work on the Forex market.
Another tip from experienced traders: when trading on a demo account, simulate the situation as if you were trading on a real account, that is, open a deposit for the amount that you would have deposited for real trading. This develops the habit of taking risks with specific amounts of money, being aware of possible losses and profits.
It is not worth delaying the training trade for a long time. Once you have mastered the mechanism of the trading terminal, acquired technical trading skills, proceed to trading on a real account and earn money on it!
