Online trading is definitely growing in popularity among more and more younger people these days. It is estimated in some quarters that there are more 15 million homes across the US using some form of trading platform, which is a pretty big deal.

For those in college, the allure of making serious amounts of money – and as quickly as possible – has driven those numbers up significantly. While many may be under the impression that trading is the answer to all of their financial problems, it is a lot more complicated than that. Learning the basic fundamentals of trading before investing real money is a wise move. It is advisable, in that case, to use a trading account risk-free (demo account), to see if it is the right choice for one’s own circumstances.

The Benefits of a Demo Trading Account

There are a considerable number of people who dive head first into spread betting, for instance. This is just how those people are; it is in their natures to act this way. For others, dipping our toes into the water first is usually the favored approach. In this case, using a demo account can provide a simulation of how things work without having to use real money.

There are many benefits of using a trading simulator or practice account. For example:

• There is no risk of losing money involved
• There are typically tutorials and educational information provided, like on CFD trading
• Demo accounts are usually compatible with mobile devices
• Demo accounts are generally free of charge to use
• You can learn at your own time and without the worry of losing real money

Where Demo Trading Accounts Differ

While demo accounts are undoubtedly excellent tools, they are not completely a replica of a true trading environment. There are subtle differences you should be aware of before basing your move into trading on your success in a simulated environment.

For example:

• Things such as slippage, interest and dividend adjustments, out of hours price movements, and more, will not be applied when you are using a practice account
• If you have insufficient funds to open trades, they may very well be rejected – (on a live account, trades will be rejected on the grounds of size or price, unlike on a practice account)

There are also other things to consider when comparing live accounts to demo accounts. If you have a lack of funds to cover margin and running losses, for example, trades will not be closed. Chart packages are also generally free of charge, which will not be the case when you are trading on live accounts.

Why Demo Accounts are Important

For college students who truly see trading as the way forward, demo trading accounts can be invaluable. With more and more of us looking towards this practice as a viable way to make money, it is logical to do the right research before we can truly judge if trading is right for our personal circumstances. As things will change from person to person, it is always a good idea to test the waters before you jump in.