With most online brokers now offering demo accounts to new customers funded with large amounts of money, the temptation is to treat the demo situation as a game in order to make the most amount of money. Customers are tempted to place large amounts of money in investments to create the largest amount of profits in the shortest space of time. Of course, in taking this approach, traders will miss the opportunity to benefit from what a demo account provides. Here are some top tips for how to best recreate the live trading feeling in a demo account.
1) Recreate your circumstances
Whilst your demo account may allow you to trade in the thousands of your chosen currency, if this is not something that you would do when live trading, don’t do it now! If you would only place a maximum of £500 on gold, then don’t use your demo account to place a £10,000 trade on the precious metal. Similarly, don’t use the demo account to make trades in assets that you wouldn’t otherwise think of trading.
2) Personalise the experience
Ensure that you keep a trading log, and try to record your emotions as you place trades and as you monitor how they are doing. Since it is nigh on impossible to replicate the sense of loss or profit that you would experience when making trades for real, it is often a good idea to add this in to the trading experience. You could create a reward system for when a trade is successful, or decide to withhold something when they are not.
Remembering that you stand to lose no money in your demo account, use this time to build up your knowledge about the specific assets in which you have an interest. The best demo accounts will provide traders with full access to graphs and charts of an asset’s historical value, ensuring that a trader is able to study this in depth. The best traders stick to assets in which they have a very good knowledge base, and your demo account allows you time to ensure that you have such a base.
4) Understand the trading platform
Open your demo account with the same platform with which you intend to start trading for real. This allows you to gain a real understanding of the trading system and the tools which it offers. Even the best trading platforms can take time to fully understand, including those that offer one-click trading, and your demo account gives you the time you need to explore the platform. You also have the option to find a new platform if your demo experience wasn’t sufficiently positive.
Your demo trading experience is a crucial step on the way to live trading with your own cash. The more you allow the demo experience to mirror the live trading, the better placed you will be to become a successful trader.Get the 5 most predictable currency pairs