The pros and cons of using forex demo account.
Before you dive yourself to the world of foreign exchange, there is no doubt that you have to learn Forex initially if you don’t want to get lost in this big, risky market. Even though Forex market is considered less risky than the other financial markets out there, an excellent comprehension on Forex education is still necessary. Here, Forex demo account come into play too.
The Pros and Cons of Using Demo Account to Trade Forex
Forex demo account has always been a good place for new traders to test their skills before entering the real battle with live account. A free demo account usually provides a real trading platform without utilizing real money to trade. That’s why it becomes a good place for traders to practice their trading skills. And the following is the pros and cons of demo account.
The Pros of Forex Demo Account
Actually, it is not only new traders who are recommended to use a Forex demo account to test their trading skills. In fact, more experienced Forex traders are likely to use demo account routinely to test a new broker, practice trading or simply try out new strategy. Some of the general benefits of using Forex demo account will be explained as follow.
• See If You Like to Trade Currency Pair
Whether you are new to Forex trading or have been around for a while, you can utilize a Forex demo account to find out whether you are emotionally and mentally suited to trade currency pair. Every trader is different and some of them might enjoy trading currency pairs while the other may find it hard to suit their lifestyle, personality and taste.
• Trade with No Risk
Rookie traders who are still learning to trade Forex often feel too confident in placing a trade with their real money because they haven’t mastered the market yet. Instead of risking real money when you haven’t really known how the market works, it will be better to try out a demo account and use it to practice until you feel familiar with the system.
The Cons of Forex Demo Account
Even though demo account can provide novice as well as experienced traders various benefits, some traders might find that the experience is lacking in some important ways. For example, we cannot deny that the virtual trading condition in demo account is different to the real one. Several other disadvantages of demo account will be discussed below.
• It Often Has Limited Duration and Funds
It is no secret that a lot of Forex brokers will limit the duration of the usage. In this case, there is a fixed expired date which means that you cannot use it forever. It means that your trading track record in demo account might be terminated or be lost at inconvenient way. Also, a demo account is commonly funded in limited amount as well.
• Order Slippage Might Not Happen as Often
To make the demo trading experience as appealing as possible to potential new clients, Forex broker my get rid order slippage of their system. Therefore, when a stop-loss is triggered in this account, it may be filled with the same price as it was entered before, while it may not happen in the live trading account.
To conclude, those are some of the pros and cons of using demo account in
Forex trading. Even though there are some disadvantages that you can find, it is still a good choice for you to try out demo account first to learn Forex trading platform and make yourself familiar with the Forex market environment.