Does Demo Account Really Help You Learn Forex Trading?


This question comes from a lot of new traders who are anxious to get their feet wet in the real world.  Many of them have taken courses and read articles on trading and they want to start making money.  A demo account sounds like it just drags out the training and postpones your opportunity to begin making a profit.  However, if you take the time to learn on a demo account, you may see better profits when you switch to a live account.

What a Demo Account Does

A demo account allows you to start trading in the real market without risking your investment.  You will be given a balance that you can use just like in a real account.  You will make trades and submit orders and have a chance to develop and practice your strategy.

You can analyze your trades to see what worked and what didn’t.  You can try new things without risking actually cash.  You can be more aggressive with your trading without fear of what might happen.

You will also interact with other traders on your demo account.  You can learn tips and information that will benefit you when you create a real account.

What a Demo Account Does Not Do

A demo account cannot totally prepare you for the emotions that you will feel when you use a real account.  You will still get the excitement of watching your trade make a profit and the nervousness when it starts to go in the wrong direction.  But underlying is the knowledge that no actual money is at risk.  This can allow you to sit back and “see what happens,” something you might not do in the real world. 

If you have a measure of success in a demo account, you can start to feel overconfident of your abilities.  You have to realize that anything can change in a matter of seconds, and a profit can turn into a loss if you are not prepared.  While it can be frustrating to have several losses in a row on a demo account, it can be frightening in a live account.  The emotions you feel when practicing will be magnified once money is involved.

A demo account is an excellent tool to use to learn the Forex market and give you an advantage when you have a live account.  However, you should not feel like you know everything you need after practicing for a few months.  Forex trading is a continual process of learning that never ends. (ea-coder)

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