A demo account is a balance provided by the broker for his virtual money so that a trader can enter into the practice of pretending transaction to test his broker services. It is mainly known as an account that is funded by the fake money so that fictitious traders can be placed. Rather than using their own money for trading purpose these accounts help the traders to take the opportunity of trader’s or dealer’s platform.This is offered by number of online brokers and some even provide the service of contests that consists reward for the profitable traders.
A popular method of online is through forex demo account. Forex demo account is also known as paper trading account. It offers the facility of trading in currencies by testing new strategies but with no loss of actual money. It provides an opportunity for the people who are beginners to the world of trading and are trying to get familiar with the aspects of trading.
Benefits of the account
The person associated with trading should have an experience of this account once in their trading business. Regardless of the fact that the prop trading institutions and the elite hedge funds always offer a paper trading account or a demo account ready for the traders so that the traders can improve their trading skills and keep practicing.
Maintenance of forex account does not only offer training to beginners but is also a good practice in long run. Here are some advantages of demo account:
- The most common among all the benefits is that the forex demo account is to practice the trading so that traders can get familiar with the trading conditions. It enables that even if you are dealing in a demo account but it reflects you the conditions of the live markets. It provides you with an opportunity of having a live trading by dealing in a demo environment.
- As when you are developing a trading strategy for the first time this account should be adopted at the first place. It is advised to test out your strategies on order to see that what are chances of success in that strategy. The biggest advantage that this account offers is that the traders can tweak and test their strategies of trading free from the risk of putting up their real trading funds.
- This account helps the traders to manage the risk. It tells about that how many units if opened or how many sizes of lots to trade can be beneficial at the first stage. Demo account makes an environment for traders where it helps traders to move to live trading easier.
The traders who are new to the trading account should avail the benefit the demo account in order to have a safe and risk free trading initially. After their practice and development of skills they can further move to the other accounts.