Before diving into Demo Trading Account, let’s elaborate that Forex or forex exchange trading is a practice that requires skill, excitement, and strong know-how of the financial markets. In this, investors need to explore the economy in-depth, identify and grab opportunities, and have a strong sense of control over actions. Forex trading involves a high-risk element; therefore, beginners must take baby steps before stepping into the forex industry. And the best way to do this is to start trading on a demo account.
What is a Demo Account?
A demo account is offered by a variety of online trading platforms including forex, stock, and commodities exchanges. The account is funded by virtual cash so prospective traders to experiment with the trading platform and its different features. The idea is to provide beginners with the opportunity to try trading platforms in an environment where risk is controlled.
Demo Account VS Live Trading Account
The difference between the two accounts is that there is no capital at risk in the demo account.
The point of a demo account is to help them get familiarized with the tools and features of a trading platform.
Also, it enables the use of forex trading strategies in a risk-free environment using virtual funds.
While most of the features are the same in both accounts, there are differences to be aware of, such as:
- Trades done via a demo account are not subject to slippage, interest, dividend adjustments, or unexpected price movements.
- Traders are not charged for chart packages on a demo account.
- A demo account is only accessible for a specific time, normally 30 days after signing up.
- Trades in the demo account are rejected due to insufficient funds, but in the live accounts, they are never rejected based on size or price.
- Trades in demo accounts cannot be closed due to insufficient funds to cover margin and running losses, but it can happen in a live account.
Demo Account Benefits
- A demo account is a free ticket to the forex industry as it allows new traders to enter the market.
- Regardless of skills and expertise, anyone can practice and learn about trading tools and techniques.
- Enable traders to develop and adapt trading strategies as per market fluctuations.
The demo account provides an educational experience and great insight into the world of stock, currency, and commodities markets. Thus, demo accounts are solely provided for demonstration purposes, and funds credited in the account have no value. You cannot withdraw or transfer funds to other accounts.
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