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The purpose of demo trading

Complete Cryptocurrency Trading Course

Every forex broker will offer you to open a demo account to try your skills there first. In the crypto world, demo platforms are rear.

What is the purpose of demo trading?

Demo trading is used to learn how to execute orders. You have to learn how to open a position, how to set up the target and stop loss point, how to exit position. This is the purpose of demo trading. Why the majority is successful in demo trading but just a few are being able to be successful in real trading.

When you trade with fake money, there are no emotions involved. If you lose, you are comfortable with that. The broker will give you new fake money again. They usually give you a big amount of money, such as $100 000. Why?

Because, if you win, you will think that you are doing amazing and you will try to deposit as much as possible. You will be sure that you are going to win in real trading too. You will have this belief until you experience first loss. Then emotions start to kick in, and problems are coming. Even if you win for few times, you will keep increasing your position on the next trade more and more until 2-3 losses crash your account. Then you will experience what the real trading is. 

To sum up, use it as a way of getting familiar with the trading platform. Never use it to actually trade there because in trading the knowledge is not the problem. The main problem is emotional weakness and not being able to go through losses that will happen sooner or later and learn and grow from them.