Inevitable Flaws Hidden in Demo Account

There are some disadvantages of virtual accounts during forex trading. If these drawbacks are ignored by traders, they may experience unexpected losses even in real trading.

There is a big temptation that high initial trading funds will largely encourage the traders to take premium risks. The forex virtual account usually has a principal of 100,000-200,000 US dollars. Even if a general trader uses these funds with a 2% premium risk of losing position, the trader may earn 300-700 US dollars each transaction as a profit. This is a great amount of profits for traders. When many investors open a real account, the balance is usually two or three thousand dollars on average with a small amount of money per transaction. Some traders may invest as they are holding 100,000-200,000 US dollars in the account, which largely increases the risk exposure. Since the trading funds of the demo account are virtual, traders will not lose money if the outcome is negative, and the profit will not be counted if you make a profit. Therefore, foreign exchange traders will not take it seriously. If it is a real account, the trader will carefully analyze the market, make decisions, and place the position. When conducting a simulated transaction, you may place an order based on some feelings. So these traders find it difficult to take a serious attitude in trading.

With a large amount of funds, it is easy to ignore fund management. The initial funds of the foreign exchange virtual account are relatively large. Novice traders who have such a large amount of funds often overlook fund management. They will enter and exit the market repeatedly without any plan and research. For many experienced traders, it is a common practice to use a demo account to test their trading strategies. However, in simulated trading, especially for novices, it is difficult to exercise strict self-discipline and control their emotions. Once they have a sudden inspiration, they will deviate from their pre-planned strategy.

In general, the demo account cannot help to control human nature, and even enlarges the weakness of traders. At the same time, the demo account is not equal to the real one. Your demo account is very good at trading,but it does not generate profits. The real account will also be great.

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