This article looks at the problems you can face with a demo account from forex brokers.
Before you trade on the live market you need to use a demo account. The demo account will help you prepare for the market and the trading that you are going to be doing. However, you have to consider the problems that you can face with the demo account and how this will affect the trading that you complete on the live market. If you do not consider these problems then you could find yourself having a hard time when you look at trading on the live market.
The Trading Platform that Forex Brokers Offer
Forex brokers offer you a trading platform that you can use to connect to your trading account. This means that all the trading that you complete with the broker will be through the trading platform. Most forex brokers will have the same trading platform for the demo and the live accounts. However, there are some brokers that will have different trading platforms. There are many traders who do not understand what the problem is with this.
If you train on a different trading platform to the one that you will trade on you are not going to be properly prepared. The differences in the trading platforms could change the steps that you take with the trading and the ease of use that you find with the trading platform.
The Order Execution of the Demo Account
The primary problem that you should consider when you look at using a demo account is the order execution. The order execution is the speed between you placing an order and it being executed by the forex brokers. On the demo account this is going to be instant. However, when you trade on the live account you are not going to get this kind of order execution.
The danger of this is that you are going to get an incorrect idea of the trading that you can do. The faster the order execution the more profits you can make on a winning trade. This means that the profitability of the trading system that you are using will be distorted. There is actually very little that you can do about. There is no way to make the order execute at the live rates, but you can adjust the data that you get about the system you use. When you look at the profitability of the system you should remove some of the profits to make this more realistic.
The Lack of Trading Emotions
The demo account that you get from forex brokers is a simulation of the live market. When you use this simulation you are not going to be using real currency. As you are not going to be using actual money you are not going to be feeling the emotions of trading. The lack of emotions on the demo account is one of the reasons why many traders lose money when they make the move from demo trading to live trading.
There is n foolproof way to avoid this. When you trade on the demo account you could pretend that the money is real, but this is not a guarantee that you will feel the trading emotions that you should.
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