Why is it necessary for all Forex Traders in South Africa to practice with a Demo account?

By: Chime Amara

The forex market is one of the riskiest investments in the world today. Often, the risk involved could be so high that one could lose his entire capital. To help traders minimize their risk exposure when they trade a live account, brokers often created a demo account used for practice, which helps traders to master the market and develop skills before proceeding to trade a funded account. Using a demo account is a very important exercise that all beginners forex traders in South Africa must embrace to reduce their risk exposure.

What is a Demo account？

A demo account is a practice account usually funded with false money and made available for beginners to practice. Demo accounts often mimick the live account and provide real market prices. They are offered to the beginner for practice before proceeding to trade a live account. A demo account is very necessary to all beginner forex traders; as it helps in mastering the art of trading and reduces their risk exposures.

Importance of practicing with a demo account before trading a live account

A. Helps to develop trading Strategy.

B. Helps to build experience.

C. Reduces the trader's risk exposure.

D. Builds confidence among the beginners.

E. Does not require identity verification documents (KYC).

F. Helps to master price actions.

G. Makes future trading easy.

H. Eliminates unnecessary mistakes while trading a live account.

I. Often used by experts to test new strategies they developed before practicing on a live account.

J. Used for back testing a Robot before linking to a live account.