The rise in the popularity of online spread betting in recent years has been accompanied by a need to gain access to different trading tools that provide an opportunity for training and sharpening the trading skills of the average trader before making live trading decisions.
As a result, most online financial brokers provide a reliable demo trading platform to allow its traders to put their long and short term investment strategies to work in a safe test environment.
The fact is that spread betting can be an exciting and profitable way to realize your financial goals, but this can only be accomplished with proper research and trading practice so that unnecessary risks are not taken and financial losses are not experienced. As with anything, the possibility of reward means there is a possibility of loss, and it could be said that in no place is this truer than in the financial spread betting markets. One of the best ways to avoid these risks is to open a spread betting demo account, so that new traders can experience live trading conditions without the risk of financial loss.
One of the reasons live spread betting trading can be so risky is that (unlike traditional stock investments) many positions are entered using leverage (where profits and losses are magnified), so the use of a spread betting demo account is absolutely essential from anyone looking to start trading these markets. Without these protective measures, there is the possibility that your account could lose more than you have actually invested and leave you with a debt if your trades work out unfavorably.
This is the major advantage of opening a spread betting demo account. These accounts are free and provide access a flexible amount of “virtual money” that can be used to put trades into all of the major asset markets. Since prices move in the same way as with a live account, new traders can see how their investment strategies would have profited if real money put into the market. Because it is simply a demo account, there is no risk of financial loss but what is gained is the valuable knowledge and practice of seeing the markets at work and the accuracy of your individual trading strategies.
If it turns out that your initial trading strategy is unsuccessful, you can always go back to the drawing board and test another method. There is generally no limitation to the number of times a spread betting demo account can be reset, so this allows you to test any number of strategies before settling on your chosen trading style.
One problem that many new traders experience is a level of anxiousness, where they might want to get into real time trading (and start earning gains) before they are fully researched and prepared. This is one of the most common mistakes new traders can make and more often than not, this results in the loss of an entire trading account before this is fully realized. The importance of patience in spread betting cannot be stressed enough and one of the first steps toward completing this behavior is to practice first with a spread betting demo trading account.
It should be remembered that there is no difference between a demo account and a live account, expect that there is no risk of financial loss with a demo account. The unfortunate fact is that, to some extent, there is no text book or tutorial that can fully prepare you for the fast changing world of spread betting. So, even if you have read every book in the library relative to the financial markets, you will still need practice watching price activity and testing your investment strategies before any real money is to be put at risk. Once your spread betting demo account is achieving consistently profitable results, you can enter the live market and be much more fully prepared with an understanding of what to expect on a daily basis.