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What is a Demo Trading Account in the Stock Market

Many trading platforms offer investors who are new to the business of trading demo accounts. A demo trading account helps novice traders to get a feel of real trading practices and rehearse before actually trading with real funds in the trading markets they wish to perform trades in. 

What is the Meaning of Demo Trading

Some online trading platforms offer potential investors a demo trading account funded with ‘fake’ money in which they can execute trades to practice trading before going ahead with actual market trades. A demo account helps new investors to get a sense of actual trading practices and be aware of what to look for while trading in actual assets and securities. Demo accounts help in the experimentation of handling real trading accounts for potential traders and many portals, including foreign exchange, stock trading and commodity exchange platforms offer these facilities. 

What is the Focus of a Demo Account?

Online trading demo account use is geared toward helping future investors to know all about the trading world. So that you start off being prepared for your future transactions in the actual world of trading, and before you open trading account, a demo account will make your journey into trading smoother. The aims of a demo account are:

  • To teach students about trading practices and how to trade in real markets and exchanges
  • To help those who have always wanted to trade, but don’t know how and what to invest in trading
  • To help experienced traders attempt new strategies of trading before they actually execute them in real-world trading

How does a Demo Account Work?

Once you know what a demo account is and who and what purpose it is meant for, you should get a grip on what is demo account working. Online trading platforms can be confusing for many people who want to trade. Demo trading is offered on actual trading platforms so that traders can make use of the real trading platform at some point in the future. This also works as a marketing strategy by trading platforms who want to attract new customers. You can sign up to open demo account and use it in the following way:

  • Use ‘fake’ money provided by the demo account to trade assets and stocks
  • You trade in real market conditions, but this is risk-free as you don’t use actual money
  • Trades are tested under actual market conditions with demo account usage

Last Words on Demo Trades

Demo accounts are not just good for newbies in the trading world, but they aid expert traders who want to try trading in a different class of assets too. Typically, any person who wants a simulated experience of trading before jumping into the real-world experience can benefit. On portals like Motilal Oswal, you can learn a multitude of aspects to do with online trading too. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account 


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