There is no denying that opening a forex demo account offers you the chance to build on the skills which will be helpful in the actual world of trading. The real-world similarity demo accounts feature is considered one of the basic tools of the trade where theory and practice meet. However, even as a review of the benefits of demo accounts outweigh the opportunities that other people see, it is notable to orient beginning traders on the things that they need to figure out on their own. Note that the previous statement emphasizes the beginning trader’s responsibility to seek his own learning, and not the other way around. You will discover why later on.
Remember that regardless of you using a demo or a live trading account, you will still employ a broker’s services. While you are provided the option to try a forex demo account online, you will revert to working with a broker once the trial period expires or if not, as soon as you feel ready to begin trading.
The differences then lie on the following aspects:
- If you have an execution issue with your broker, you will need to call customer service if you have a forex demo account. In live trading, any broker-related issued can cost you losses in terms of money and/or time. This is because as your broker rushes to fix the problem, the foreign exchange market would have changed.
- It is rare for brokers to let their clients use their own live trading account for simulation purposes. This means that a high possibility of the client adjusting to a new trading platform is there.
- When using a demo account, brokers have the ability to execute stop-loss. In live trading, where money is actually moving, there may be some slips in terms of the time the stop-loss strategy is executed.
- Because a beginning trader uses only a demo account, the commitment he has in learning the tools of the trade is not as high as when he is immersed in live trading.
- In terms of discipline, a beginning trader may not be able to develop appropriate trading values because the platform used is only a forex demo account. This can lead to bad trading habits.
- There is a chance to do overtrading. This means that because the money in the demo account is merely a virtual trading medium, value is underappreciated. As such, careful trading and adherence to the value of one’s money may not be developed.
As you can observe, the attributions of the learning derived from using demo accounts is not in the platform but it is on the learner or the beginning trader. This is why the difference between demo and live trading is seen more on the side of the user because the demo account platform is his chance to cultivate healthy habits in trading. It is never possible for trading platforms to teach beginning traders the habits of trading. It is more of the traders learning from the platform.