Forex demo account is one of the best ways to attract traders in the market. Why so? This article will explain more details by showing the pros and cons of demo account. Here is also the list of the best demo account brokers for your consideration:
- Exness reviews
- Hotforex
- XM
- FXTM
What is forex demo account?
According to definition, forex demo account is a trading account which uses virtual cash instead of real money. Therefore, traders will face no risk or loss. They are free and safe to trade with demo account, which makes it attractive to most traders, especially beginners who are new to the market. Why is demo account attractive to traders? Because they can use this account to to try their strategies and test the trading system, while evaluating a broker before working with it.
Pros and cons
Pros
Trade without risk and loss:
This is very useful for most traders because all they need to focus is to learn and practice as much as they could. They receive virtual cash and so, they trade by that kind of money, too. There is not any risk or loss, which may be good for traders to get used to forex system at the beginning.
Learn skills and techniques:
Skills and techniques in forex trading are difficult to be built. Because forex is a complicated sector, it takes a long while to understand and work with forex. For this reason, the best demo account brokers is a good choice if you want to practice skills and techniques more.
Evaluate a trading platform:
There are now many trading platforms provided by many brokers in the market, but not all are suitable for traders. To decide which trading platforms we should work, a good way is to check it in advance. By using demo account, we could know more about features of a broker such as navigation, creating charts and trade executions. Bugs and errors are also found in this stage.
Choose currency pairs:
Be careful when you choose the currency pairs because the most popular pairs in the market are also the most volatile, especially during midnight and early morning.
Cons
Funds and duration are limited:
It means that when using a demo account, you are allowed to use a certain amount of funds within a short period of time. This policy is required by most best forex brokers BRKV as they want traders to come into real account as soon as possible.
Demo account conditions are different from those of real account:
It could be said that most traders are shocked when they come into real account after working with demo account for a long time. Why so? It is mostly because of the differences in conditions between two kinds of account. With demo account, the conditions are easier and more beneficial to traders as there is no risk or loss.
Data is delayed:
You may not be updated with live or real-time data in demo account and as a result, your decision in real market may be affected by those delayed data.
Cost for emotion:
Do you feel sad when you lose a huge amount of money? Just imagine that you trade and lose an amount of $100,000 in real market and demo account. What situation affects you more? Needless to say, when losing $100,000 real money, you will make your move more carefully and this is called emotional cost, which only occurs in real account.
Personal information will be used in other purposes:
When you sign up a demo account, it requires your name, phone number, email address and other data, which can be used in other purposes.
Conclusion
Demo account is very useful with many advantages and benefits. However, you should also consider the weak points of this account to decide whether to use this account type or not.
