In this guide, we will analyze not only the best online trading simulation methods or online demo trading, but also the best method to prepare for real trading and investing in the stock market online from home.
Today there are many online trading platforms for the Forex CFD market, which allow traders to practice and experience trading without investing even a penny of their capital. This is possible through online trading simulation. We are talking about the so-called demo accounts for investments with online trading.
With these systems you will have the opportunity to make a realistic simulation of online trading, or to trade in the same way and with the same characteristics as the real account. Later, when you will have experienced and tested the best online trading strategies, you will open a real trading account with the best online trading platforms, also taking advantage of the possibility offered by many brokers of the welcome bonus on the first deposit.
Free online trading simulation
The free online trading simulation allows to all traders to:
- understand the Forex market (or any other type of financial market);
- speculate on the financial markets without risking anything;
- test your abilities as a trader;
- get the necessary skills;
- get knowledge and confidence to operate correctly.
The trading simulation, in fact, offers the advantage of a free demo account, in order to invest virtually so that, even in case of errors, the invested capital is not lost.
Basically, through a demo account, the trader has access to the broker’s trading platform, thus being able to get familiar with the platform without any kind of pressure. In fact, the demo account has a “virtual” balance: the money in the demo account is neither yours nor the broker’s. They are simply virtual money, thanks to which you can practice without putting your capital at risk.
For anyone who has never traded online before, using a demo account for (at least) the first month of trading is a must. If you do the opposite, and decide to invest directly through the real account (therefore using your capital), you will certainly lose all the money invested in your trading account. It is normal: if a person has no experience in an area, it is much easier for them to make mistakes. And in this case, every mistake means an economic loss.
Opinions about online Trading simulator: are the demo trading platforms safe?
Let’s start by stating that earning with online trading is certainly possible, and this is also testified by the many results that have been obtained but, from here to say that you can get very rich in a short time, it is instead a scam!
Online trading, like any speculative activity, if carried out seriously and with the right skills can certainly bring profits; but as we said, you have to be prepared and have a lot of experience on your shoulders. That’s why we recommend starting with an online trading simulator!
You must also be able to predict not only the trend of the markets, but also to study their functioning. And what better tool than a demo account?
We recommend using, regardless of whether you are using a real trading account or a demo account, only online trading platforms authorized and regulated by CySEC or by another body that guarantees transparency, which means that the broker is honest and reliable. Each financial broker must have at least one license in its country (where its legal office is registered) in order to operate in Europe.
Therefore, if you choose demo trading platforms of licensed brokers, you will never take any risk. Just open a demo trading account, which many brokers also offer free of charge, and you can do all the practice you want, without ever having to use real money.
Characteristics of a demo account for online trading
Once you have identified the broker with whom you decide to invest, based on its characteristics, we just have to register completely free of charge and from this moment it will be possible to access the demo online trading account.
Finally, we would like to remind you that with the online trading simulator it is possible to operate with multiple types of financial instruments, such as:
- stocks and stock indices;
- Forex Market;
- CFDs, etc.
Obviously, it all depends on the broker you have chosen: usually financial brokers are specialized in one or more areas, but lately many brokers are expanding their offer precisely to prevent traders from having to sign up to multiple brokers. The most complete ones have currency pairs (Forex), commodities, stocks, stock indices, ETFs and even cryptocurrencies included in their offer.
The demo account is certainly an excellent method for practicing, but also for testing your trading strategies in complete safety. Remember, however, that not all brokers offer a demo account: always inquire before registering with a broker if a demo account is also offered. And make sure that the demo account is available for an unlimited time: some brokers offer it only for a certain period of time (like for example one month), after which they deactivate the demo account.
The steps to take when you are looking for a demo account are as follows:
- Choose the financial instrument to operate with (Forex, CFDs, stocks, commodities, etc…)
- Choose a regulated broker
- Make sure that you have the possibility to access a demo account
- Register for free with the broker
At this point you will have access to your demo account for online trading. You can easily practice with the trading platform, as well as with the charts and assets that you will use to trade.
Last note: some brokers may offer you the demo account only if you open a real account (therefore if you make a first deposit). The choice is up to you: if you like the broker and it convinced you, you can decide to make a first deposit so as to obtain both the real account and the demo account. If you are unsure of your choice, look for another broker which offers you a demo account for free. Nobody forbids you to use a broker only for the demo account and then open a real account with another broker.
Learning to manage the emotions with a demo platform
Using a demo account for online trading allows you to practice safely, as well as to learn how to manage your emotions. Yes, because when investing with online trading, emotions turn out to be our worst enemy. The situation in online trading becomes even more delicate, because with a couple of clicks you can invest hundreds and hundreds of euros (if not thousands). And when it comes to making money or losing money, our brains often go haywire.
Especially those who have never traded online before, risk being influenced by their emotions. Maybe in the beginning you are too afraid to invest, and for this reason you become too “anxious” and try to invest as little as possible, thus avoiding to run into potential losses. But actually, by doing so you leave out excellent investment opportunities. On the other hand, you risk becoming too “euphoric” in case of unexpected gains in the first trading operations, which lead the trader to feel too confident and to let down his guard.
Every time we earn or lose money by investing in online trading, we are also hit by a lot of emotions. Because of an income we can feel euphoric, happy, optimistic; because of a loss we can feel angry, frustrated, disappointed. All these emotions remain in our heads, and are likely to affect our investment decisions.
This is why trading strategies are used: if you have a strategy, you must always follow it, because this means operating in a rational way. If you follow your emotions or instincts, you will only do damage. Seeing is believing: if you have opened a demo account, try to trade simply following your instincts. Then find a good online trading strategy and test it through the demo account. You will be surprised at the clear difference between trading with or without a trading strategy.