Forex Demo Accounts - are They Useful for Novice Traders?

By Monica Hendrix

A lot is made in forex trading about using a demo account but they won't help you win when it comes to real time trading even if you have made a profit - Why? The reason is obvious...

No money is at risk therefore emotion is absent.

Trading is an emotional game and it's emotions that make traders lose - so if there not there when you trade, you don't know what their impact would be.

A demo account is only good for learning the mechanics of trading.

A new service being offered, helps traders experience emotions, while only risking a small amount of cash and lets them trade even - if they lose and go debit!

This allows them to trade in a set period as much as they want with limited risk then at the end of the period:

The broker takes the losses and the client takes any profits.

The period is normally a couple of weeks.

Traders get a real time trading experience, with lots of trades and the experience of money on the line but they also get - strictly limited risk.

These accounts provide a more authentic experience and a more exciting one, as money is on the line.

These protected accounts are good at giving you the feel of what trading money is actually like and how you cope with your emotions.

Lets face it all traders are impacted by emotion to varying degrees and discipline is the most important variable in forex trading success.

The equation for market success is:

Your Method + Executed with Discipline = Forex Success

If you don't have discipline to execute your method you won't win, because you won't have a method at all, unless your trading signals are executed properly!

A demo account will help you get used to the trading platform - but these protected accounts, will let you feel the emotional side of trading.

Many traders think they can cope with their emotions and then get a nasty shock when they trade for real.

These accounts offer you a step up from a demo account before you trade properly and are a useful exercise for any new trader.

About the Author

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