Are Forex Demo Accounts Accurate? (Surprising Answer)


FOREX Demo Accounts are funded with fake money which helps the prospective customer to experiment with trading in the forex market. Demo accounts also help the prospective customer in understanding the potential risks involved in forex trading.

Generally, people experience a big difference while trading with a demo account and with a live account; though there is a big psychological difference in both. With a forex demo account, we don’t feel the risk or emotional pressure.

forex demo trading

Are FOREX Demo Accounts Accurate? Or are they just rigged? Most of the Forex Demo Accounts are not accurate and are rigged. All the demo accounts are not rigged, but most of the brokers rig their accounts. Forex Demo Accounts are used by brand new traders who need to know the basic concepts of forex trading. Needless to say do your research and go with a reputable broker.

Forex Demo account gives you the different result as compared to a live forex account, this is because, in a demo account, you are using it just to learn and understand things included in Forex market. In a live forex account, you are not going to bet freely, you will not invest the way you were investing in the demo account.

What is the use of Forex Demo Account?

Here’s the list through which you can learn some points on the usefulness of Demo accounts of Forex:

  •  Demo accounts are for brand new traders to experience the forex market.
  •  It is for the new traders to learn some basic but important concepts of forex trading and those concepts are long positions, short positions, pips etc.
  •  Another use of forex demo accounts could be for testing out of the broker’s platform. Instead of going for a live account directly, it is better to test out the broker’s platform because it helps you in understanding your broker.
  •  Some traders might use forex demo accounts in doing the primary test for their new methods.

After using the demo account, you should not think, you’ll perform the same way you performed in the demo account. Because demo accounts are used for different purpose and major brokers are rigged, they want to maximize their benefit.

This is the main problem in forex demo accounts. You should use a demo account only for the purpose of acquiring knowledge about different concepts of this market. Here are some reasons why demo trading is bullshit:

Why Forex Demo trading is not accurate?

Forex Demo trading accounts are not accurate because most of the brokers in the forex market rig your demo account to make you start the live account and hence, they make their earnings. There are many other reasons why forex demo accounts are not accurate. Below mentioned are some reasons:

1. You are not Trading with Real Money:

In forex demo accounts, you are actually not trading real money, so, here there is the absence of the main factor of trading, i.e. Risk. When we are talking about trading, it could be share market trading or forex trading, both of them are consists of the risk factor.

While in the case of forex demo accounts there is no existence of the risk factor. Hence, they are not as effective as effective a live trading account is. It is impossible to have the same sense of uneasiness in the demo trading account. Here are three important aspects of how a demo account differ from the live account:

  •  There is no existence of real risk.
  •  You are not trading real money.
  •  You won’t lose anything if the trade goes bad.

Every trader who trades with live forex account, he knows the feeling of losing money. The same feeling cannot be felt while trading through a demo account. You trade very consciously in the real account because, there is the possibility of losing something through the real forex account, which is absent in the demo trading.

2. Demo trading losses don’t feel real:

When you sign up for a demo account and start trading, you will not trade as consciously as you will trade in the live forex account. This how both are different. The losses occur in demo don’t make you feel the real.

In the case of live trading, you invest your hard earned money after considering different factors. This is how demo trading differs from live trading.

Hence, the existence of the risk factor is lacking in demo trading. Demo trading losses you feel are not the real ones. For a newbie forex trader, the sense of losing money and learning to accept losses are very important lessons.

3. Demo accounts are rigged:

Nowadays, most of the forex brokers rig their demo accounts. For a newbie trader, it is very necessary to know this. New traders believe that Demo account and live account both works the same., they rarely know about the truth.

Many brokers’ demo accounts give you a false representation of the broker’s performance. For a new trader, it is important to experience the actual performance of the live market. Because in demos they cannot experience each and every important aspect of the live account.

Many newbie traders start their live accounts just after experiencing the demo. They are not aware of most of the brokers who rig accounts for their benefit. So, demo accounts should not be compared in the sense that, it would experience the trader same way that they experience in a live account.

Hence, these are some reasons why demo accounts are not accurate and they some are rigged. Now, as a new trader, you need to know when you should use demo accounts. Demo accounts are very helpful sometimes.

When Demo Accounts are OK to use?

As we have seen, demo trading losing doesn’t feel real because you are not trading with real money. Then, why does demo accounts exist? What is the use of it? When it is OK to use? Below-given is the list includes what is the use of demos:

  1.  If you are a brand new trader and need to learn basic concepts of this market, demo accounts are best for you. Forex market basic concepts like pips, short positions, long positions etc are important to have knowledge about, before starting with a live account.
  2.  When you want to test out the broker’s performance before going live, you should definitely try out the demo account.
  3.  When you have a new method to try out, you cannot simply try out with your live account, then you can try it out on the demo account.

Conclusion

Therefore, Forex Demo Accounts are not accurate because most of the brokers rig their demo accounts. Hence, it is very important to use the demo account only when you want to learn basic concepts of Forex trading or you want to try out a new method.

For a brand new trader, you cannot get the same experience which you can get with the live account because in demos, you are not trading with the real money and also there is the lack of risk in using the demo accounts, this is why results are different with both of these accounts. So, we can conclude that Forex demos should be used only for learning some basic concepts of the forex market.

In the New Paradigm as taught by Steve Gregor demo accounts are for learning what not to do. Get your volume of trades (VOT) in so you can become a professional trader.

 

Tab Winner

Hello I am Tab Winner welcome to my Forex blog. I have been trading Forex for over 2 years now and a stay at home dad for about the same amount of time.

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