Demo trade will never make you a trader
Many newbie traders in Cameroon, Africa and even around the world are learning to trade through so-called demo accounts in order to practice trading without really taking the risk of losing money. In this article, I'll tell you a little bit about the real purpose of a demo account and why you should avoid it if your goal is to be successful in online trading.
For those who don't know what a demo trading account is; I'll brief you. We all know that in order to trade, it takes money which is transferred into our account with a broker in order to buy or sell financial assets. This type of account with real money is called a real or live account (regardless of the broker). A demo account is an account that the broker makes available so that you can invest in the financial markets in simulation mode with bogus, fake money. So you can lose all that money with no problem since it is bogus money. The concept is great especially for novices. Why should I invest my funds though I don't know how to trade? You might as well learn without losing money. It is therefore a miracle solution and well accepted by new traders.
To show you that reality is different, I prefer to tell you a little about my beginnings. When I started trading online in 2008 in my tiny room at Dschang University in western Cameroon, it was difficult for me to open a demo trading account. At that time, you first had to have a real account in order to benefit from a demo account from your broker. The broker only gave access to the demo account to traders who were already supposed to be doing real trading. Weird isn't it? And to this day, some brokers continue to require a real account to be opened in order to access their demo account. For the majority of brokers as of the writing of this article, the demo account has a lifetime (1 month maximum). So even having the demo account, it will be deactivated after a month.
I am telling you this so that you understand that the demo account, contrary to what is believed today, is not designed for learning online trading. No, no and no !!! Remember this: "You are never going to learn trading online through a demo account".
If the demo account is not for learning to trade, then what is it for?
Well !!! The demo account is there to allow you to get to grips with the trading interface (platform) offered by your broker. With the demo account, we test the broker’s services, execution speed, stability; you learn to use your platform. Trading with a demo account is trying the service of a broker. It's like testing a car before you buy it; such as gauging its propulsion, the sensitivity of its pedals, how to configure systems, etc ... This is why at the beginning of the era of online trading, only professionals could have demo accounts. The broker wanted to demonstrate professionals that his platform and services are better. What did the broker want? TO DEMONSTRATE!!! In DEMOnstrate, I clearly see DEMO; not you?
The newbies didn’t have access. The broker has nothing to DEMO to you. Do you want to learn an activity through a process designed for experts in the field? does that make sense to you? I do not think so.
Why then are the brokers offering us demo accounts today and saying it's to learn trading?
The answer is simple, it's purely marketing. Online trading has been democratized these days. Brokers target a large number of individuals. And to tell you that you are going to learn trading with their demo is to hope to have your email address and your phone number to constantly call and write you for the sole purpose of forcing you to open a real account. And there it’s Forex and CFDs. If you want to trade stocks, ETFs, Futures and options, having a demo account will become difficult for you because the brokers in these different markets have kept the logic of old times.
Finally, trading is an activity that is 80% psychological. It’s also known as the mental game. Demo-mode psychological state and real-mode psychological state are two completely opposite states. It is this factor that makes 1000 years of demo trading never worth 1 second of real trading. If you are new to trading and have been demoing since then. I challenge you to take your blood pressure when you trade your demo, and when you are in for real. The absence of the main feelings (fear, doubt, and greed) that a real trader experiences renders any learning to trade on a demo account null and void.
If you are interested in online trading and really want to learn, trade live. Even with a small amount of money, it's better than a demo. Demo trade to get started with a new trading platform for you, to test the services of a new broker, to back test a new trading strategy. The real account will reveal your profile as a trader that you ignore, it will show your level of risk aversion that you ignore. In demo, you will be pressure-free and you will not know anything about yourself and your real investor profile. The demo account can trick you into giving you the illusion of being good for an unpleasantly surprised when you are in real trading.
At Salix Nigra, We learned from our mistakes and now none of our training is done with demo. We used to train young people in demos who showed extraordinary performance during training but when they were alone at home managed to lose everything because they experienced new feelings that did not exist in demo. Alone, therefore, they could not manage. We require our learners to follow their learning with a real account. Under our supervision and guidance, there is nothing to fear. If you want to bring out the trader in you, I invite you to consult our training offer by clicking here.
I hope you now know what the demo account really does and can use it to do what it was designed to do.