Make the most of your Demo Account!

Most brokers offer demo accounts that you can use to trade using virtual money. The accounts are a great way for new players to learn how to trade. It allows you to try trading without having to use real money. The account keep exact track off your progress and you can see if you are making or losing money.

Most players stop using their demo account when they start trading using real money. The demo account is seen as a tool that allow beginners to try trading, nothing else. This is a big mistakes. The demo account (often) remain available to you even after you started trading for real money and is an immensely valuable tool. It is in fact one of the most valuable tool a successful trader have at their disposal.

demo accountThe demo account can be used for a long row different useful purposes. The most important of these purposes is to try out new things, new ideas, new systems and new strategies. Most successful traders are constantly trying to become more successful. To stay ahead of the curve. To do this they are constantly developing new strategies and tweaking their old ones.

The demo account allow you to try out your ideas without risking any of your own money. Some new strategies might seem great on paper put fail miserable when they are implemented in the real world. By trying your ideas in the demo account you reduce your risk, avoid loosing money and can run long simulations even if the strategy doesn’t seem to work initially. This allow you to collect a lot more data than what you most likely would want to collect if you were loosing real money on the trades.

Another important use for the demo account is that it allow you to split test two different strategies and see which one that works best and give the highest return. You do this by using one strategy, your main strategy, on your real account and a second strategy on your demo account. It is sometimes possible to contact your account manager to get more than one demo account to be able to split test several strategies at once. The more you trade the more accommodating the account manager will be.

The more different strategies and ideas you try out the more successful you can become as a trader. Knowledge is profit.

The demo account can also be used to compare the result over time with different brokers. This will however never be 100% reliable data since different brokers have different options and it is impossible to make the same trades at the exact same time at different brokers. The data you get is as best an indication of the relative return at different brokers and at worse completely worthless.