A demo account is an unreal account that comes with money play which you could make with virtual trades. The demo accounts are completely free and are supposed to actually represent the market conditions. Some brokers will limit demo account for 30 days. A good broker will allows unlimited usage of demo account.
What about the advantages of using a demo account?
1. Demo Account is free
Demo accounts will not pay anything. Majority of the brokers need your name and phone number so that they can contact and try to convince them to open an account and could deposit money. This is the only “price.”
2. Develop and test a safe system without risk
Development of the trading plan which works for you is a hardest thing. Demo account allows you to experiment with different ideas until you find trading system that suits you. Demo account allows you to reveal strengths and also weaknesses of the trading system without compromising the penny.
3. Learn to use effective trading platform in an effective way
The trading platform could be difficult to understand in the first glance itself. Possibility of using demo version of the play on the money market is that you can learn to place trades before investing your money. The intermediary may sound good, but if trading platform is poorly made together, it is best to understand it, but instead of testing at the same time risking hard earned dollars.
Disadvantages of using demo account
1. No proper understanding of the real risk
It is a benefit to be able to do trade without risk, but leaves out an important part of the law of trade. Trading psychology is essential. It feels very odd when the hard-earned money is now at stake. Demo account will help you to save potentially huge losses, during learning, but do not tells you anything to manage the emotions you feel once again that the account balance is associated to your portfolio.
2. No encouragement of proper money management
A demo account comes appears with large sum of money deposited in the same. Most of time, a true beginner will not have much money to trade. Amount of money is deposited in demo accounts between $ 50,000 to 100,000. These huge amounts established a psychological expectation of large quantities of easy profits. This may encourage for taking risk in an excessive manner, once you switch to real account with youl real self earned money. The big difference happens when you have real account and the loss of truth.
Demo accounts do largely contribute to learn forex trading. They can help you learn to do trade without putting money online. This is considered as a great benefit if you are a beginner true. clearly understand Rational use and availability of demo account and practice trading once before committing money.