After selecting the best Forex trader, you are going to need to open up a Forex trading account with them. The method is simple and also requires choosing an account type, registering and activating the account.
Most experts and professional Forex traders generally advise novice Forex traders to initially start a demo account before moving on to live accounts.
Demo Account Vs Live Account
Live Forex trading accounts are serious accounts where Forex is traded in real time. Here, Forex traders purchase and sell Forex using money that is real. In a live trading account, one can either make profits or perhaps losses depending on their trades.
Demo accounts are virtual simulated Forex trading accounts complete with all requirements plus environment very much like a living trading Forex account. The one difference is that no real cash is traded, earned or lost.
Here the trader can buy and sell Forex and make profits or losses but no real money is actually exchanged. The main aims of demo Forex trading profiles is to;
· Help new Forex traders learn how you can trade Forex without risking the money of theirs
· Gives traders a real time experience and feel on easy methods to trade in Forex
· Help traders try various strategies and come up with useful strategies for live trading
· Used by new traders to build confidence and motivation before moving to live trading account
Difference between Live Trading and demo Accounts Accounts
In practice, it’s been shown that successes achieved when trading in a demo Forex account might differ significantly with all those from a live trading account. This particular distinction in results is attributed to a number of factors including;
· Lack of real cash mindset
· Emotional differences
· Risk and caution
Lack of Real Money Mindset
Because there’s no money lost in demo accounts, traders tend to have a mindset of having absolutely nothing to lose which make them try different strategies that either fail them or perhaps result in success. In addition, there is no pressure in case they make costly trading mistakes.
In live accounts however, without trader is willing to try a strategy which they have not used before for fear of losing their money. In case of trading mistakes, traders feel the pressure to recoup their losses hence clouding succeeding judgments.
Even though Forex traders attempt to get rid of feelings when creating Forex trading choices, trading in living accounts could sometimes lead to nervousness and a flood of feelings to traders as they start to be stressed when making such crucial decisions.
This’s because wrong decisions would result in them losing money. In demo accounts, you will discover absolutely no emotions in play.
Caution and risk
While in demo accounts taking risks and simply being less cautious might end up making more profits, live accounts traders are much less prepared to take risks and are cautious on the trades they generate.
In live trading however, potential of traders making more money is able to result in taking unnecessary risks. Risks in live trading could possibly end up in committing trading sins like cutting off your winnings, moving stop-losses and revenge trading
This differences between live and demo trading accounts may be sorted out by reducing trading mistakes as well as sins, focusing on your trading plan rather than the money even when under pressure and being prepared for emotionless state of mind every time you change over to live trading.