Forex demo accounts vs. forex real accounts (practice vs. live accounts)
Without a doubt, all individuals who are now trading on the international Forex market made their initial trade using some demo account. Nevertheless, there exists an important difference working using demo accounts and the real trading accounts. While acquiring the trading skills as a newbie, things seem fine as long the rule that “every next deal is successful if you earn more profits that the preceding one” seems to be followed. However the moment you shift to the actual trades on the real Forex market, the scenario changes altogether.
The basic dissimilarity between the real and the demo trading accounts lies on basis of the fact that actual money is invested in one of them. With the demo account, the invested money is rather of a virtual kind.We can read this is 3 Benefits & Limitations of a Practice Trading Account . Therefore generally the traders do not think regarding the responsibilities for their decisions when switching from demo to real accounts. While trading on demo accounts the traders drop their guards altogether as there is actual money involved. The trader forgets all failures and remembers on the victories that he might have achieved. This is where the danger lies as after a while the trader starts feel overconfident and wishes of opening actual accounts and begin actual trade with actual money.
It must be considered that the difference between a real and demo account also lies on the emotional level. A trader should necessarily get over the feelings of greed, fear and doubts as these emotions can hinder carry out confident trade in Forex market. The time duration for a demo account must also be properly measured as the expert traders have pointed out that too much of demo trading without taking a go at the real trade can have unfavorable consequences. The ideal way to have an idea of real trade while gaining an understanding of the market behaviors is through creating a real account while working on a demo account on the side. A market situation that you can comprehend well enough to predict accurately would gain you profits from the real account and increase your confidence in Forex.
The understanding of keeping a real trade account will make create an interest in the trader to analyze the market. The ups and downs in trades are natural and it happens to everybody. Ultimately the trader sense a change in him professionally; the experience will definitely earn a trader profits.
It is not a compulsion to open a demo account prior to actual trading in Forex, however it must be kept in mind that real accounts require a certain degree of knowledge and skill at trading. Therefore if you happen to new at trading then it is advisable to start with a demo account.