Experts explained in what cases trading with virtual funds is justified and what side effects it can lead to
Major cryptocurrency exchanges such as Binance, Coinbase, Huobi, OKEx and others allow users to open demo accounts for trades in test mode without making a deposit. So novice traders can study the operation of the trading terminal without the risk of making mistakes and losing their funds. The topplabs.org experts explained when to use a demo account and when to abandon it.
Training and testing
A demo account is a great opportunity to practice trading before starting to trade cryptocurrency for real money, says Mikhail Karkhalev, an analyst at the Currency.com crypto exchange. According to him, it is worth switching to a real account only after trading on a demo account becomes comfortable.
Also, beginners may need a demo account when testing new functionality without risks, for example, margin trading, explained Nikita Zuborev, senior analyst at Bestchange.ru. He added that experienced traders often use a demo account to test new trading strategies or algorithms for trading bots.
"The benefits of such accounts are much greater than the potential harm if used correctly," the analyst said.
Even with a successful passing of the trading strategy test on a demo account, one must remember that success in the past does not guarantee a similar result in the future, Zuborev warned.
When working with demo accounts, you should definitely take into account their main feature – the loss of fake money causes a less emotional reaction in a trader, explains Zuborev. According to him, what can be treated neutrally with virtual funds may not be possible when working with a real account.
“The attitude to the demo account is always more forgiving, since the trader is practically indifferent to how much virtual money he loses,” added Karkhalev.
When working with a demo account, it is important not to get used to excessive risk, as this will lead to a crash on the subsequent transition to a real account with real money, explained the analyst of the crypto exchange Currency.com.