Demo Account Flashcards
What is a demo account?
A type of account offers by trading platforms, funded with fake money and enables prospective customer to experiment with trading.
Allows you to practice trading until you’re ready for real trading
Paper Trading
What is a live account?
An account that holds real money
To opens a live account you will need:
Live opening Bank
Requires paperwork and identity verification
It takes a few days
What’s the benefits of a demo account.
Great way to test out:
Brokers
Trading platforms
User experience features
Risk trying out other asset classes
Free environment that’s closely related to the real market.
Can be used as an educational tool
What are the benefits of a live account?
You can benefit by making real money
Executional Related Differences
Requote Price.
Price Feed.
Slippage.
Broker Errors
Trading Platform
Trader Related differences
:Lack emotional commitment
:Unrealistically positive trading environment
:Unreal capital provision
:No real consequences lead to bad habits.
:Revenge Trading boredom trading over trading
:Insufficiently evaluate risk
:Real money means real emotions
How to be a realistic as possible
:Pretend the money is real as much as possible
:Monitor emotions and how trades are affecting you mentally while those emotions are felt
:Trade the same amount of capital in the demo account as will be traded in the live market
When should I go live?
Practice your demo first so you can:
:Learn your trading platform and its features.
:Get familiar with chosen asset class
:Become familiar with market and market interactions
:Become familiar with trading jargon and terminology and how it relates to actual functionality
