Imagine your friend has been wanting to try trading for a long time (we both know this friend is you but let’s just call him Mike for the sake of convenience).
So Mike doesn’t know where to trade, he’s heard about Forex and crypto, but it all looks potato-potahto to him. Don’t worry, Mike! We’ll help out by explaining the difference and shedding some light on demo mode trading, which is definitely the greatest invention of mankind after that device that allows dogs to infinitely play with a ball.
Mike probably knows that a demo account is a tool that should be used very carefully. But what is a demo account and how to use it? What is the difference between demo and live accounts? Is it worth trusting the experience gained during demo trading?
A Demo Account Put Simply
A demo account is a virtual simulator that allows you to make transactions on a current market chart without investing real money. It allows a novice trader to try their hand, learn, evaluate whether these lessons are important, and master the functionality of the trading terminal.
Originally, demo modes appeared in Forex trading, and then the initiative was adopted by crypto. As you might have guessed, a Forex demo account allows the trader to simulate a real trading environment. There is 0 risk, and the practice allows a trader to start free online trading quickly before working with real money.
Forex traders are advised to employ the Forex demo as their first account in order to understand what trading on a foreign exchange market looks like as well as get used to the broker and the trading platform. But does a Forex demo account really allow traders to test their trading skills and enjoy all the advantages of demo trading?
Is this Forex feature as useful as is commonly believed among non-traders?
To answer this question, it is necessary to
- consider the negative aspects that Forex trading using a demo account has,
- define the impact such trading has on our wannabe trader Mike,
- and evaluate the effectiveness of Forex demo accounts in training.
Negative Effects of Forex Demo Accounts
While working on a Forex demo account, Mike can observe discrepancies, as training accounts are 3-15 minutes late. Differences in the flow of data, the degree of filtering, different servers, and the degree of their load – all this means that different prices and spreads are formed.
Usually, the discrepancies are small, but Mike should know that they exist (just as well as thousands of unlucky Forex trading stories).
This is due to the fact that swaps are updated manually, and demo accounts are not considered a priority, so rates may be outdated due to oversight. Discrepancies in the operations of the Forex demo account and the real version negatively affects the subsequent performance of the market participant.
Why Trade Crypto?
That’s the reasonable question Mike would ask after the Forex demo horror story. With crypto, demo trading has remained a cool marketing tool with no confusing lagging graphs.
Forex charts were designed to make you feel like the God of trading. Crypto demos show you the real market. The technology copies real trading on the exchange and scales it to a demo mode. In other words, the demo mode shows you real trades made somewhere in the real world.
At Nominex we believe that demo mode should look approachable and be utilized to its fullest potential. Our goal is to make crypto trading popular and cool. That is why we have introduced the concept of “entertrading”.
Besides, we are preparing a training program for traders like Mike, because demo mode is the perfect place to train! Trust us, when Mike enters a risk-free demo trading tournament at $0 and gains up to $10,000 USDT, he…meaning you, will not regret it.