Demo Accounts – Stock Market Simulator and Forex Demo Account
Regardless of the trading platform, the first meeting with the interface can be overwhelming. Even when the tool is highly intuitive, we might see so many charts, numbers and buttons at the same time, that we can feel understandably confused. To compensate for this, professional trading platforms have test versions with, among other features, a simulator of trading in the stock market or the forex demo.
Whether a stock market simulator or the forex demo, all test accounts function in the same way: you sign up and receive a certain virtual balance, e.g. 50 000 euro, which you can invest based on your strategy. Only the money is not real; everything else – quotations, prices, market changes, etc. are real to life. You have access to all or most of the markets and financial instruments. You can test out the functionalities of the platform, including real trading, technical analysis indicators, other information and analyses. Without risk, the simulator allows you to test a trading platform's functionalities and learn how to use it.
1. You get to feel like a private investor and can test your investment strategies without incurring the risk of losing any actual money.
2. The simulator and demo account both help you learn to use your selected trading platform effectively. During real investments, this learning will help you move around the platform efficiently and not miss out on potential investment opportunities.
3. Test platforms allow you to get to know individual markets and financial instruments (how they work, what they are dependent on, what to pay attention to, etc.), without any real risk to your capital. These test transactions will tell you what you feel confident in when it comes to investing your actual money.
4. The stock market simulator or forex demo enables testing the most popular types of orders. These include: Stop Loss, Buy Limit, Sell Limit, Sell Stop, Buy Stop, Take Profit, etc. You will also develop an empirical understanding of how approaches like the financial leverage or short selling work.
Remember: neither the experience of the stock market simulator nor the forex demo reflect the true emotions that accompany each investor during their first trades with real money. Underestimating this can lead to disastrous mistakes being made. Learn some common mistakes of novice investors below – then avoid making them yourself!
Common mistakes made by novice traders:
- Not acknowledging that losses are a natural part of trading, just as profits are. Reducing the value of losses rather than their frequency is more important.
- Holding on to losers in the hope that a trend will eventually reverse. By failing to admit defeat, the novice investor's losses are avoidably increased.
- Opening up a number of large positions at the same time and not being able to control them.
- Risking most of their capital in one transaction – a key mistake to avoid absolutely.