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The Downside: Understanding the Disadvantages of Forex Demo Account Trading

Jul 22 • Forex Account • 1740 Views • Comments Off on The Downside: Understanding the Disadvantages of Forex Demo Account Trading

Although it is advisable that every forex trader should make use of demo accounts, there are also downsides that you should be warned about if you want to fully take advantage of these demo accounts. These disadvantages of forex demo account trading are not without solutions to turn them around and for you to have a worthwhile demo account trading experience. There really is nothing for traders to lose with these forex demo accounts, except perhaps for the time that they spend “playing” with these accounts. Forex traders have everything to gain from using forex demo accounts for as long as they are choosing and utilizing these accounts the right way.

Instead of getting discouraged by the disadvantages of forex demo account trading, you can take these downsides and make use of them as a guide when it comes to choosing which forex broker to open a demo account with. These downsides are not difficult to understand and deal with.  Even the beginner forex trader would be able to actually make their way around these disadvantages and come out with valuable lessons from forex demo account trading. Patience when it comes to searching for the right forex broker, diligence in studying the forex trading platforms, and willingness to learn trading lessons are essential qualities any trader needs to have in order to hurdle these disadvantages of forex demo account trading.

These are some of the disadvantages of forex demo account trading and how they can be addressed to make the demo account trading experience more fruitful:

  • Limited features. The demo accounts that some forex brokers are offering might be limited when it comes to features and in availability. Although this would give the forex trader a feel of how it is to trade, it will not simulate the real forex trading environment.  If you want a demo account that works like the real thing, you have to look for forex brokers that offer parallel forex trading platforms for demo accounts. A lot of forex trading platforms today are already offering unlimited demo accounts with the same features that are also available in the live accounts. The only difference is that the money that is traded is not real.

 

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  • Not real-time. The quotes that you would want to get for your forex demo account should always be real-time. As you would have learned from your forex education, price quotes are influenced by both technical and fundamental factors. With the different technical factors presented by your forex trading system, you want to be able to evaluate the fundamental factors or the market conditions at the same time. A forex demo account with real-time feeds will allow you to test your skills at both technical and fundamental analysis.
  • No risk, no emotional connection. One factor that significantly impacts the outcome of demo account trading is the attitude of the trader about the money he is trading in the demo account. Since there are no risks in a demo account, traders often do not feel an emotional connection to the virtual money they are trading with. One of the disadvantages of forex demo account trading is that the trading strategies and decisions can be made without fear of losing any money. This detachment does not translate to real live trading, however. Practicing with a forex demo account should also involve practicing how to deal with the emotions that come with trading real money. Experts always warn traders against emotional trades and stress the importance of sticking to their strategy whether in a demo account or in a live account.

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