Trading with Demo Trading Account Basics
Trading is risky and most people are scared of trying this as there’s a lot to lose. One can lose
even more if he doesn’t know the nits and grits of trading. Those who decide to start trading
often go for educational courses where they learn what it is all about. However, sometimes this
is not enough as learning trading requires practical experience. Does that mean you have to
lose a few in order to start gaining? Well, not necessarily. Demo trading accounts allow you to
trade without losing any real money. Read on to know everything about the demo trading
What are Demo Trading Accounts?
Demo trading accounts are offered by trading platforms, funded with fake money. You can use
this fake money to start trading and know the features of the trading platforms. You can
experiment with this money before you set up a real trading account where you can lose and
gain real money. Stock trading platforms, foreign exchange trading venues, and commodities
exchanges offer these accounts to give security to the clients.
Demo Trading Account Explained
Originated in the 21st century, demo trading accounts are given to customers to make them test
a platform’s user experience and features. They don’t usually have to commit or pay the
commissions before getting and using a demo account. Demo accounts are not only used by
amateur traders but also experienced ones to experiment with other trading assets than the
ones they are experienced in. They do this to know the marketing influencers of that specific
asset as each market asset is subjected to different influences, allows different kinds of market
orders, and feature different kinds of margin requirements than the other.
The traders experiment with this “paper money” and buy and sell stocks with this fake money.
However, you are trading with real market influences and margin requirements.
Why Choose Demo Trading Account
There are many reasons why traders choose demo trading account. Some of them are:
– No rejection
As is the case with live accounts, there’s no rejection of trades. Trades are rejected due
to insufficient balance but with a demo account that can never happen. You are always
covered when it comes to funds and you can always trade with everything you have.
– No slippage
Slippage refers to the difference between the expected trade price and the at the time of
execution of the trade. It can both be positive or negative but in the case of a demo
trading account, you don’t have to worry about the slippages. You are trading at the
exact price as was expected.
– No additional charges
Live trading requires paying at every step and that too with real money. This can cause
frustration at every step. But in the case of a demo trading account, you don’t have to
face such hurdles as you’re already dealing with fake money.
– No closing of trades
Trades close unexpectedly and can cause the learning to stop. With a demo trading
account, the trades never stop and the same is the case with learning. Even with
insufficient funds to cover margin and running losses, you can continue the trading.