It’s fairly common to come across websites that advertises a “free” demo account; however, some are just part of a marketing promotion to lure customers into opening an account with them. And, only after spending some time on the site that one realizes that the demo account is just a movie showing how to navigate the website and what a trading account with them looks like. Traders are encouraged to choose a broker that offers a real practice account as it comes with innumerable benefits in the long run. One good example is the eToro demo account (you can read more about it here: wikitoro.org/etoro-demo) which is the type of virtual portfolio that you need to look for.
Demo Accounts: The Basics
Demo accounts are an integral part of a forex, stock or CFD trading platform. A “virtual” account involves real assets that can be traded in real expiry times; however, traders will not lose real money. One can sharpen effective business practices, be familiar with the platform features and get a “feel” of how it is to trade underlying assets. Bear in mind that the amount of virtual cash provided to customers differs with varying brokers. Some brokers would set the availability of the demo account for only one day to a few weeks, providing the necessary time for customers to practice their skills on the site.
It is not easy to find brokers that offer a demo account. Most would reason out that it is entirely unnecessary, that it would cloud the judgment of clients when it comes to decisions involving real money versus virtual money. Some traders would do fine without any help; however, it pays to have the basic understanding of how a trade works, placing as many as you would like, if you have an active demo account.
Do I Need to Make a Deposit First?
Traders with a demo account are privileged because not all brokers offer these for their clients. The main reason why is that brokers do not earn revenue when they provide expensively-designed platforms, or live access to real-time execution of trades. The cost to maintain this is shouldered by brokers, which makes them all the more careful in providing access to demo accounts for customers. There is an unwritten contract between customers and brokers, by virtue of the deposited amount, where customers are expressing their commitment to the website. The broker will then have a good reason to provide the customer with a demo account.
The only requirement for traders to use the demo account is to make a deposit on your brokerage account; it does not require spending a single penny from the deposited amount. Depending on the type of demo account offered, considerations are given to a time limit. More often, a deposit locks in the opportunity to use it as long as the trader remains to be a customer of the site. Whereas, a “free” demo account usually lapses or expires after a certain period.
Where to Get a Demo Account?
When the online trading industry was just starting out, there are not that many brokers offering demo accounts on their platforms. Now, they are getting popular as there are more brokers and clients that are venturing into digital options. They offer good services, and their main difference lies in the list of major assets and the minimum deposit requirements.
The best part of a demo account is it mimics the act of trading with real money. The platform environment is the same, and you will be familiarizing yourself how to open positions, just like in a real life. What’s lacking is the emotions, except for the excitement of exploring this relatively new type of financial instrument. There is the absence of guilt and fear of losing real money, as you only get to spend virtual cash. Open a demo account so that your skills and confidence will be enhanced, both of which will definitely come out when you start dealing with Buy or Sell positions using a live account.