Simulated trading accounts are a MUST if you either haven't tried spread betting before, or are new to spread trading. In fact, they're important even if you are experienced in other markets, so you can see how futures markets react compared to the cash (immediate) markets. Virtual trading offers an opportunity for potential spread betters to understand the markets, the dealing process, how a software platform works and margin requirements and test trading strategies before committing real money, and going through the normal account set up procedures involving proof of ID and Address. The ability to practice with virtual money reduces the risk of clients entering into incorrect positions and helps clients understand the risks involved in dealing with geared products. This is also very important when you are risking your own money as losses can exceed gains.
Ayondo are currently offering a free demo account to start practicing. It offers a convenient way to learn to trade online, and practice, practice and more practice! Is there a better way to do it than a free demo?Demo accounts are also useful for a number of other reasons -:
The best simulated trading account I've found is at Ayondo. I wish all real spread betting accounts were as user friendly as this simulated account. Here you can not only trade shares and indices, but they also offer a fantastic range of FX, and they will get you used to spread betting, CFDs, and other instruments. In addition they have a few guides and research, market overviews, stock alerts, and numerous reports and news articles.
In order of ease of use, other simulated trading accounts from CFD and spread betting firms (which also offer commodities) are as follows:
1) SpreadCo: This simulation is identical to a real money account, with all products available and all costs exactly the same as when playing with real money. Despite them being a relative newcomer to the spread betting world, SpreadCo has really grown on me in the last few months as I've been frustrated with the lack of flexibility from some other providers.
Is demo trading identical to trading for real? Virtual trading is a good way to sharpen your skills before parting with any real money. Demo accounts are also great if you want try out different things. But demo accounts carry no stress, there is nothing quite like making real losses or gains (even small ones) and in this context paper trading is of little use from a psychology perspective - it totally lacks the pressure that comes with real trades - and that will hit you when you move from paper to real no matter how much the paper trading taught you. You see virtual trading will always be a lot different to trading with your own money. You will always take more risks and do things you wouldn't with your own money, no matter how much you try not to. Sometimes it is better to do it for real but with tiniest allowable stakes. And don't scale up from there too soon, no matter how impatient you are to move up - wait until you've turned your token starting amount into your target amount - and then do that exercise again at the same tiny stake, to find if it was a fluke!
THE PSYCHOLOGY OF TRADING A SIMULATED ACCOUNT IS VERY DIFFERENT TO TRADING WITH REAL MONEY. Many people consider simulated trading to be a waste of time because of this simple fact. This is because you only ever know how you are going to react if a market is going against you or in your favour when you are trading with real money. That's why I recommend joining the IG Index TradeSense programme which allows you to start off at a much smaller bet size than normal. For example, in the first couple of weeks of trading at IG Index the smallest stake is 10p per point, then 20p for another two weeks and 50p for the final two weeks. You can thus get a feel for how trading works for a minimal level of risk, which can help you decide on your technique and favoured markets, and how you should use the other tools such as stop losses.
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