Demo Account vs Live Account 📱 Benefits & Risks 👥
Make the Shift from Demo to Live
The journey from trading novice to expert is very often not a straightforward one.
Learning about all the ins and outs of the industry is not an easy feat and many new traders tend to feel overwhelmed by the avalanche of information, strategies, and patterns that they need to assimilate. So, what’s the best thing for a trader to do? Practice, practice, practice and we know just how the way to do it. Read on to see how.
If you’re reading this article, you are likely interested in trading on the live markets with real skin in the game but want to make sure you are fully informed before you make the leap. This article will guide you on the benefits of moving from demo account to a live account.
What’s a Demo Account?
In a nutshell, a demo account can be described as a simulator. Indeed, a demo account replicates the conditions of a real trading account without the utilization of real money. Upon opening your demo account on a Forex platform you will be given virtual money to conduct simulated trades. It could be said that in many ways this is similar to playing a game of Monopoly; you are strategizing and trading but both earnings and losses are fictitious.
On the other hand, your live account is funded by real money that you use to conduct actual trades in the market of your choice.
Why Moving from Demo will help you Prosper
Getting too comfortable –
The most common mistake that many traders do is to stay in their comfort zone too long. A demo account offers an environment that feels reassuring and safe. As a result, it’s very easy to feel reluctant to step out in the real world. However, while it is important to use your demo account to practice, it essential to experience the real deal. Ultimately, a simulation is also a simulation and can never offer the same conditions as the live trading environment.
No pain no gain –
Losses are an important part of every trading. Indeed, a loss can be an important lesson that helps you to make better choices in the future. However, losses in a risk-free environment will not have an impact on your balance and therefore it’s easier to take these more lightly.
The emotional dimension –
Even in highly rational environments like the financial markets, our emotions are always present. Fear, sadness, and risk awareness have all been wired in the human brain to keep them safe in primitive hostile environments. These instincts are still activated whenever we could lose something valuable. The risk-free environment of a demo account can never trigger these emotions and therefore your simulated trades will never have this key dimension.
Gaining experience on a demo account ensures that you have the necessary skills to keep going from one level to the next. However, now it’s time to step it up and start earning some real money. Better still, why not use both! Yes, you heard right, use a live account to get a feel for the real markets but keep the demo account to carry out backtesting and to better your skillset, this way you have the best of both.
Feel the rush the real markets have to offer, sign up for a live account here.