If you are interested in spread betting then one way of learning the ropes, without risking your hard earned money, is to use a spread betting demo account. Let us briefly look at exactly what is meant by a demo account, the benefits and the dangers, if any.
One of the best things about a spread betting demo account is that they are usually free. For example you can open free demo accounts with Capital Spreads and Financial Spreads. Without spending a single penny, you can often start practising on a variety of stock market indices, currencies and commodities almost immediately after signing up.
Since you will not be trading with real money, you do not have to make an initial deposit. You trade with virtual money, so neither your profits nor losses are real. This aspect is, according to some professional traders, the biggest drawback of a demo account. Since you know that you cannot lose any money, your brain can seem to focus on the big wins and ignore the losses.
These traders argue that a demo account is only good for comparing different trading platforms in order to choose the one most suited towards your purposes and for system testing. Before you sign up for a demo account, review the spread betting company with which you are signing up.
Chances are that if you have been trading on their demo account for a few months, you are going to sign up for their real money spread betting account once you are ready. You do not want to find out then that they have poor customer support.
Whatever the drawbacks, the fact of the matter is that a demo account typically mirrors the live platform. This means an investor can often trade in currencies, commodities, shares and even indices and bonds without having to risk their own money, although note that some demo accounts do have a reduced range of markets available.
A good demo account will often allow you to access spread betting charts depicting the price movements of the trading instruments. You will typically be able to access bar charts, line charts and candlestick charts.
With some demo accounts you will also have access to real time prices, not delayed prices. Many demo accounts will also allow you to display a variety of technical indicators on your spread betting charts. With some platforms you can even display more than one indicator at the same time, which makes it simpler to use two indicators to confirm a trading signal.
Your spread betting demo account will usually also provide you with detailed statistics about the trades you made, the profit or loss involved in each trade and the balance in your account. This can allow you to analyse your trades in order to try and find a pattern so you can eliminate or adjust losing strategies.
Spread betting involves a high level of risk to your trading capital and you may lose more than your stake. Please ensure that spread betting matches your investment objectives as it might not be appropriate for all types of investor. Before trading, make sure that you are fully aware of all the risks involved. Only spread bet with money you can afford to lose. Obtain independent advice where you feel it is necessary.
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