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You don’t have to spend your own money on Forex right away. Most brokers offer practice demo accounts, which will let you test out the Forex market with virtual money using real market data. Using a demo account is a good way to learn how to trade. You will be able to practice by pressing the buttons and grasp everything much faster.
As we said above, a demo account will let you practice your skills without wasting real money. Even if you make a mistake, you won’t lose anything. It sounds tempting but there are pitfalls.
First of all, demo accounts offer a bigger amount of money than a trader will use during a real trade. A trader can choose any amount of money for practice. However, people often choose more than they will really trade with. They take extra money for mistakes. But on the real (live) account, traders won’t have money for their faults. Moreover, with a big capital, the trader doesn’t understand real losses as they are easier recouped by a big capital than by a small one.
Secondly, another important disadvantage of the demo account is the lack of real emotions. It can be described by psychology. When you have nothing to lose, you do not experience fear. Fear influences trader’s behavior and not many traders can control their emotions. As a result, it doesn’t make much sense to practice your skills when you do not know how you will behave in a stressful situation.
However, if you follow several rules, the demo account can be a really useful tool for practice.
Furthermore, there are situations when you definitely should use the demo account.
Making conclusion, we can say that demo account is a good option for training. You can test your strategies without losing money if they are unprofitable. But you should remember about the weaknesses of demo trading.
Pay attention to the fact that the minimum real deposit at FBS starts from just $1. This means that you can start trading with small amounts of money and thus limit your risks, while still having a chance to reap profits on the live account!