In this era of electronic trading, opening a trade account with a forex broker who provides a simple, yet efficient, trading platform is a must for all traders. While hundreds of brokers operate in the market and offer varied trading platforms, it is best to choose one that is simple to understand, suits your trading style and offers trading in products that you wish to invest in. Beginners in the world of online trading should consider first creating a demo account to learn the intricacies of the market and understand the workings of the platform before going live.
Before a trader actually opens a live trading account and deposits money, it is prudent to open a demo account, which allows review and testing of the features of a trading platform. The demo account is funded with simulated money and allows investors to conduct fictitious trades under real trading conditions to familiarise themselves with the working and various features of the platform.
Traders can choose to open a real account on the trading platform, depending on their experience with the demo account. Apart from allowing traders to experiment with an array of financial products, such as options, futures, forex and other derivatives, a demo account also offers them an opportunity to test different trading strategies. Theoretically a demo and real account are the same, but the actual performance may differ due to several reasons.
Despite the differences in performance of demo and real trading accounts, the former is very useful for beginners, since they allow traders to get accustomed to the way the markets work. Demo accounts are also useful in testing the trading conditions provided by a broker. The difference between the performances of demo and real accounts can be resolved by starting to trade live with a small amount and keeping one’s emotions in check.
If you liked this educational article please consult our Risk Disclosure Notice before starting to trade. Trading leveraged products involves a high level of risk. You may lose more than your invested capital.