Many brokers provide an opportunity to trade on a demo account, without making a deposit, that is, you have the opportunity to trade for virtual money, using a real trading terminal, real quotes. In general, this tool creates the illusion that you really trade with real money. Is it worth doing? We are definitely sure that 1 or 2 months of trading on a demo account will be an excellent solution.
If you are new to investing, it is certainly worthwhile to start with a demo account. You will get a feel for trading, you will learn how to buy securities, how the market moves. For long-term investing it would probably not be suitable, because you are unlikely to want to freeze your virtual funds, for example, for a year to assess the result after that time, to see whether such “investments” have brought results.
Trading on a demo account has one big disadvantage: you do not risk your own money. When you trade with virtual money, the feeling is totally different than when you risk your own money. In the second case, you unconsciously begin to analyze how much money you can earn and how much you can lose. And when you have real money in your account, earned with blood and sweat, it’s very likely that you can’t think rationally enough.
Emotional reaction is a big problem for all traders, investors and speculators. That’s why, having tried themselves on a demo account, even showing good results there, such people, when they go to the real market with real money, show much worse results, simply because they can’t cope with their emotions, and that prevents them from thinking soberly. That’s something to keep in mind when you’re trading on a demo account.
So, if you are really new to investing and want to do it, then try yourself on a demo account. It will be a good experience for you. But you should not build any serious strategies on a demo account, and expect that they will 100% work on the real market. In addition, even if you’ve had a lot of success trading on a demo account, don’t rush to invest big real money into a real trading account. Try trading with little money first, and see how you react to market movements.