Demo Account Has A Problem!

Discussion in 'General Trading Discussion' started by TraderAnalyst, Oct 8, 2019.

  1. TraderAnalyst

    TraderAnalyst Senior Investor

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    Trading with demo account is great as you don't have to risk your money in it but the problem is that you are unaware about the real situation. For only when you dive in the deep waters can you learn to swim. In this situation you are not experiencing trading with real money. And the frustrations of the brokers is also not known. So demo account is good but ultimately real is what counts!
     
  2. J_C_Anderson

    J_C_Anderson Senior Investor

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    It is very useful for the trader to be able to improve his trading skills using demo account without exposing his funds to the risk of financial loss. For sure, it doesn`t give you the feelings like real trading, so you probably wouldn`t understand your trading problems in the sphere of psychology, but in general it is a grea tool to make your trading better.
    Some of the traders also use demo account to test new strategies, but to my mind such apporach has many disadvantages.First of all, it is extremely time-consuming. It could take several weeks or even months to make enough trades to get the reliable results. Another point is that testing results would be impacted subtantially by your mistakes: you can miss a trade or execute the trade that doesn`t fit the strategy rules. That is why if you want to check the performance of your strategy, it would be better to backtest it using specail software like Forex Tester, that allows you to test strategies without any actions of the trader that gives accurate testing results. Backtesting software executes dozens of trades based on the strategy rules using historical data provided by the brokers. As the result, you will get a detailed report on the performance of the strategy in long term perspective.

    Anyway, demo account still is a necessary tool that could help you in many situations. For example, you can use it to understand whether it is comfortable for you to trade using your strategy and how it fits your psychological preferences.
     

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