Demo account, or paper trading account, allows investors practice stock trading without risking any
money. This is a virtual account simulating everything that would happen in a real account.
It’s like a regular account where investors buy and sell stocks, Exchange-traded funds (ETFs), and other financial instruments but no real funds are involved. No actual money will be deposited to or withdrawn from the demo account.
The main advantage of demo accounts is that you can try investing in the financial markets and not risk any real capital. If you click a wrong button, choose a wrong order type, or even trade a stock you did not intend to, no harm is done.
You get a virtual environment which looks and behaves exactly like the real thing. Test your investment ideas and strategies before implementing them in the live markets.
Demo account may give a false sense of security, and emotional detachment from the trading. This happens because there is no risk of loss of real capital. Many beginner investors who start with paper trading may show considerable profits in demo accounts but when real money is on the line, emotions overtake and impact the decision-making process.
Get familiar with the trading platform. Customize, adjust and tweak the panels to create a workspace that works best for you.
Learn all the order types and the ways an order can be placed. Learn predefined hotkeys or create your own for quick order entry.
Treat it like a live account and every cent there comes from your bank account. Do your research before each trade, keep trade size inline with the amount you intend to deposit, and keep a trade journal.
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