Broker Demos–The Perfect Place to Gain Investing Experience

photo: 401(K) 2012

Once you make the decision to invest, you may be temporarily paralyzed with indecision.  Where should you invest your money?  Which investment is best?  Which broker should you use?  How diversified should your funds be?  The questions can go on and on, and if you’re not careful, they can so overwhelm you that you don’t know where to start.

When you’re just beginning, start slow.  There’s no rush.  This isn’t a race; you have plenty of time.

One good way to start is to use free demo accounts.  Most of the large brokers offer free demo accounts even if you aren’t a member.  Using free demo accounts from several different brokers has a variety of benefits:

1.  You can get a feel for your risk tolerance.  There are many different ways to invest, some riskier (and more profitable) than others.  You may try a forex demo and realize how much money there is to be made.  However, the speed of this type of investment isn’t for everyone.  Knowing what you’re comfortable with is the first step to investing, and generally, you develop this knowledge with investing experience.

2.  You become comfortable with the different brokers.  Choosing an online brokerage isn’t always easy.  Trying out their free demos, which hopefully mimic their real transaction process, is a great way to decide which broker you prefer before you join or pay any trading fees or other fees.

3.  You gain experience.  If you’ve not invested before, demos let you practice implementing your new investing knowledge before risking your own money.  You gain experience and confidence.  After you feel comfortable investing through the demo experience, you can start to make real investments, a little at a time.

4.  You can chat with other investors.  Some brokers also offer areas where you can interact with other investors and trade strategies and knowledge.  This can be a valuable resource for the novice investor looking to learn more about investing.

The investing world can be overwhelming, but it doesn’t have to be.  Take the time to practice your skill and chat with other investors to learn more about investing.  As you gain confidence, you will soon be ready for real-time investing, comfortable in your skill and the type of investments you choose.  Remember there is no rush.  It’s better to practice and gain confidence and knowledge using a demo rather than your own money.

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