Often newbie traders face the trouble of losing their money into currency trading because of their inability to tackle fluctuations. At times like these, most of them leave Forex for good and the rest take to educating themselves more on the subject. Experts are of the opinion that nowadays it is easier to try your hands on Forex trading via Forex demo trading platform. Unlike real currency trading, this does not involve actual money and can be tried anytime traders think it necessary.
Soon as you download the Forex demo trading platform, your Forex broker will provide you an amount to start trading. This amount cannot be redeemed for cash and can only be used to understand the trading intricacies. Say for example that you are willing to trade GBP/USD. Instead of buying more of GBP and waiting for it to rise in value, demo account lets you do the same only with no money involved. So if relative prices move against your favor, you do not lose a bit.
Who does demo trading appeal?
Suppose that a new trader is willing to try his hands on reaping benefits from currency trading for the first time. He opens an account in one Forex demo trading platform and after the formalities, he finally considers trading with one of the currency pairs. Demo trading allows trading with any currency pair of your choice.
Additionally, your Forex broker might provide you a welcome bonus, which is a certain fraction of the deposit money it has provided you with. Thus if you start with $1,000, you get the advantage of trading with $1,200 (say). Add to it a particular leverage ratio and it even allows scalping and stop losses.
Off course, not any experienced trader will need these benefits, because most of the times, they are already informed about the potential risks this money carries. However, free demo Forex platform seldom lets you redeem your profits (if any).
Remember that Forex demo trading platform is not meant to earn benefits; it helps traders with managing and understanding the risks so that they can trade with ease. Compare the same position with traders using micro lots for trading. Although lesser in size (and lesser risks involved), this means that your money earns an interest amount, hence is not negligible.
Validity of Forex demo trading platform in the long run:
Forex demo platform download is valid until newbie traders thoroughly understand when and where to use specific strategies and the list of indicators that help in correct future price detection. Although veterans are of the opinion that prolonged usage of demo accounts to trade blunts your decision-making skills and it becomes hard to revamp your trading psychologies towards a more competitive trading environment.
This is the reason why many traders suddenly lose huge amounts just after they switch to real money trading from demo trades. Long time traders opine that paid or free demo forex platform keep you away from the basic reason why you trade in the first place, profit gaining.
Make use of demo accounts when you are unaware of the degree of hardness that currency fluctuations will be associated with. Do not depend on Forex demo trading platform for very long because you will want to gain money from relative price fluctuations and not just view the changes. Ensure that your Forex broker helps you with tutorials and all other helping guides to increase your chances of a win.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.