The Good and the Bad of Forex Practice Accounts
Forex practice accounts are a free service that gets a divided vote: some like it while some are sick of it. Why? A freebie is always good news and a free practice account to help you acquire money-making skills can’t be bad.
A practice account gives what it claims to give, which is free forex trading practice that is welcome news for neophyte traders. These Free practice Forex accounts are created by brokers with the idea of attracting people to forex, which is fine as they could increase the number of traders in their platform as well as the market. It also helps the new trader learn the ropes so the advantage works both ways.
There is more to currency trading than using a simple click and go. While a lot of brokers create accounts requiring the lowest minimum deposits to start the trading experience for newbie traders, some have now made a practice account where ‘fake’ money is used to begin trading. The reason behind this is to get people interested in trading, find out how it works, and, by constant practice, gain confidence without having to burn cash.
The practice account to instill knowledge and confidence are pretty good, but trading without risking anything may not work well in the long run.
The introduction of fabulous amounts of ‘fake’ money will make the risk almost non-existent that will more likely encourage taking on more risks even on poor investments, which in reality you wouldn’t dare to do. This could give a false sense of security and overconfidence, which is not a good attitude to have in the trading business.
Another scenario would be taking big risks and pulling them off, which gives you false confidence to pull another big one. When you pull that off too, you gain overconfidence that can encourage you to start real-time trading using your hard earned cash and taking big risks.
Taking it slow and with great care are trademarks of successful traders, tempered with a good level of self-discipline. Practice trading is fine as long as trading is done as if you are handling real money.
The best way for you to learn the ropes to become a successful trader would be to use the free practice for two weeks and opening a minimum account after that. This will teach you more about awareness, patience, discipline, and money management skills.
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