There are preliminary stages to be completed in any business and Forex makes not exception, with the Demo Account being the best way to enter currency trading. It will grant the newcomers the chance of experiencing first hand the benefits and perils of foreign exchange, without taking any risks. It is like enjoying a trial period that enables you to do everything you want with points that have the value of real money without costing you anything. After you complete this stage and are confident in your trading abilities, you can upgrade to a Live Account and start spinning real money.
It would be wrong to think in terms of choosing between the Demo Account and the Live Account, because these two don’t exclude eachother. Instead of gambling with your savings and jumping head first into murky waters, you can use the opportunity granted by the trial period. The most dedicated traders will start with the Demo Account and at the same time continue their study on the mechanisms that make Forex go round.
This is the right thing to do, because if you try to assimilate as much information as possible in the early stages and put your newfound knowledge to test, you will make significant progress. The benefit of the Demo Account is that it puts you into a sandbox environment where you can experiment and learn how it feels to trade, without being frightened by the prospect of losing money. The same mechanisms will be used to place orders, which should help you on the long run but also on short term, because you accumulate practical experience.
You should know that the Demo Account is managed by a computer and as a result the orders you place will be executed considerably faster than they would with a Live Account. For the latter, a broker will take care of this process and that’s why it will take slightly more time, which is something that all traders will experience. While it is not necessarily impairing your order or make you the underdog among other traders, it will be a small shock after you make the transition.
The bottom line is that an educated trader will start with the Demo Account and use it for as long as he needs to feel confident in his skills. Only after he understands how the market works and what Forex is all about, they will open a Live Account and trade real money.