Demo Forex Account
Opening up a demo Forex account is a technique that many traderas use to practice trading in the Forex market. Here are some of the pros and cons that come with using this type of account.
Realistic Simulation
One of the advantages of using this type of account is that it allows you to get a realistic simulation. Just like a fighter pilot that gets to fly a simulation hundreds of times before going live, you will do the same thing with your Forex trading. The only difference is you won't get to launch any missiles once you go live (hopefully). With a demo Forex account, you get to see the market much like it really is. When you place a trade, it will perform just like it would with a regular trade.
Play Money
Another advantage of using a demo account is that you get to use play money. They don't actually give you paper counterfeit money to use (although it would be a lot more fun). They simply credit your virtual account with the amount you ask for. That's right, you could open an account and fund it with $100,000 right away. If only it was that easy in real life!
Practice Strategies
With this type of account, you can really try out your Forex trading strategies. When you buy a new automated Forex trading strategy, you can simply plug it into your demo account before risking any of your own money. This allows you to see how the trading software performs. If the automated Forex software does not perform well, there is really no reason to put the software on a live account. Your software isn't going to perform better under pressure like Michael Jordan.
Demo Problems
Although this type of account can come in very handy when testing out your strategies, it also comes with a few issues. For example, when you place an order on a demo account, it will automatically be processed without any wait. When you place an order on a live account, it might take a few seconds to process. This can change the quality of the results when comparing a live account against a demo account. This means that most demo strategies will usually perform a little better than what you can get with a live account.
