To make exchange trading profitable, a trader should expand his knowledge
of broad theories and gain practical experience. The issue with theoretical knowledge
is quite easy, since a wide range of relevant materials are public. But it is
not that easy when we speak about practice.
The easiest solution in this case is to open a demo account. So, we are ready to share information and explain why you need a demo account on the exchange, where and how to open it, and why it can be useful not only to a novice trader, but also to an experienced one.
Demo Account for Beginners. Why?
The definition is already a part of the answer.
Demo account is a trading account, which has all the features of a real one, but doesn’t require any real investments.
After opening a demo account, a trader gets a certain amount of virtual money. He can use it to make any transactions at current prices but without any financial risks. You can work with a “trial” account on the same trading platforms as with a real one.
In this case, a demo account will allow you to safely get the basic practical experience of buying/selling any exchange-traded assets and master market data analysis provided by the trading platform, and then smoothly switch to trades with real investments.
There are the following advantages for a novice trader:
- it takes only several minutes to open a demo account,
- it is free, no deposits are required,
- real trading experience without any financial risks,
- you can take your time and understand principles of work with each financial instrument,
- operations with virtual money completely eliminate psychological pressure and stress and allow you to assess situation.
Advantages of Demo Account for Experienced Traders
Skilled traders also use one or several demo accounts, but they do it for a different purpose. In addition to standard strategies for buying and selling assets, many experienced market participants independently analyze the situation in the markets and build their own trading strategies. They do not work right all the time, so it is more convenient to open a demo account and test them without any risk for a real account. After a strategy is perfected and show a result, it can be applied to real assets.
The second advantage is the training of technical skills. Since even a small delay during trading on the exchange can result in serious financial losses or lost profits, it is extremely important to be able to work with the trading platform without wasting time on thinking and searching for the right menu items. Using a demo account allows you to make basic actions automatic.
Where and How to Open It?
Access to a demo account, like to a real investment account, can be provided by a broker. It doesn’t take much time: all you need is to fill out a simple form and use the received login/password in the selected trading platform.
This is very convenient, since a novice trader does not need to make initial investments, sign documents and generally leave the house. At the same time, from the very beginning he will be able to evaluate the main aspects of working with a broker and in the future, when moving to the first "real" trades, use its services to open a real trading account.
In addition, many brokers offer access to a web platform along with the demo. You can immediately test new opportunities.
And the last advice: choosing a broker to open a demo account, pay attention to its features and the list of available exchanges.