Ins and Out of Forex Demo Account You Need to Know
It is highly essential to learn forex trading properly before you invest real money in forex. Thanks to the forex demo account for allowing the users to trade forex before opening a real account. Besides, a forex trading demo account helps a trader understand a platform and underlying brokerage service. So, this account is also a great opportunity for expert traders, as they can check out a broker before joining them. Try a free forex demo account from our recommended Forex brokers.
Furthermore, a free forex demo account can offer you immense benefits and opportunities. With that in mind, we will discuss all the aspects of the forex demo. Besides, you will also know the things you should know before selecting the forex trading platforms for a demo account.
Definition of Forex Demo Account
As you already know, a demo account allows a trader to replicate a live trading environment without any sort of real investment and put your real money at risk. Besides, traders can initiate free trading online quickly. Therefore, it is a great opportunity for traders to practice forex trading with a jump for any kind of risk.
However, every newbie trader should try the demo account first to experience the real trading environment. Besides, the traders can get an idea about the brokers and platforms too. The trader can also work on their skills too with some enticing benefits. Take advantage of free forex demo account before staring with the real money.
Yes! You can definitely open a demo account absolutely free. However, it is a tactic for the brokers to grab the attention of the potential traders. You don't need to pay any money to open a demo account. Hence, you can test your trading skill through zero risks.
So, with the free forex demo account, your capital will not be at any risk since you are not investing anything. Moreover, traders have the facility to move to the live account anytime they want. For example, some brokers may offer access to the real market data while you have the demo account. Access to the recent trading insights will also be available.
Benefits of Forex Trading Demo Account
If you talk to any seasonal trader, you will know the list of the benefits of forex demo. We have interviewed some of those traders to know their firsthand experience from the demo account. Following is the list of the benefits you will receive.
Learn Trading Forex
Having a demo account is like getting forex trading for free. It is because this kind of account allows the trader to implement the training to practice. And obviously without having any potential risk. So, you will be trading via a virtual fund which will be given to the broker in your account.
Besides demo accounts, some brokers also provide forex education too, so that traders can upgrade themselves to a real account. This enables any trader to take some risks and steps into the real forex trading world.
Get Familiar with the Trading Platform
Most brokers come with some well-known trading platform, and MetaTrader 4 is one of them. So, the demo account holders also get the benefits of using the regular trading platform that is offered to the real account holder. Hence, through the demo trading platform, the potential trader can get an idea about the forex trading platforms. Through this, they can know how to trade forex and the trade opening and closing processes. Furthermore, you will also know the different tools using the process according to your requirements, such as various indicators. So, by opening a demo account, you will get to know the MetaTrader 4, MetaTrader, cTarder, and other popular trading platforms.
Moreover, when you move forward for live trading through real investment, the experience from the demo account's trading platform will surely make you mature. Hence you will become a risk-taker. Hence, forex practice platforms can be a key to your long-term success.
Learn Managing Emotions while Trading
Studies have found that most forex traders fail due to their uncontrollable emotions that come up while trading. It can be in many forms. Such as someone may like trading with a single currency, even though they are losing it. Some may feel overconfidence during a trade. Furthermore, some may feel Euphoria after winning a few trades. Hence, they tend to take a huge risk and lose drastically. So, controlling this emotion is highly essential for forex traders.
But if you don't know how to control those emotions, it is evident that you are at a huge risk even if you are an experienced trader. So, practicing through the forex demo account comes in handy in this case. While practicing, you may gain control of these emotions. However, most beginners don't know about this trading. They will face it gradually. So, if they can get an idea about these from the beginning of their career, they can grow themselves as successful traders.
Develop and Test Different Trading Strategies
To start forex trading, the fast and foremost thing is to create a strategy. Without a strategy, traders may feel themselves fall into a deep sea. Demo accounts can be a good option to create and implement your strategy since you are not putting any investment in the line. You can create any kind of strategy and impose them in your practice trading and see if these are a winning strategy. However, if the strategies don't work, you can pick another one and check. The best thing is that if any strategy fails, you have nothing to lose.
Furthermore, you can also build a trading pattern for yourself, which you can apply in your real trading accounts. As you can access the indicators, you can make a pattern with this too. Since you have a risk-free trading opportunity, you are open to apply any sort of creativity in your trading.
Learn to Implement the Best Trading Routine
You may already know that the forex market never sleeps. Therefore, it enables you to trade anytime you want. So, it is normal that you may wonder about the best time for trading. Furthermore, markets are located in different time zones, so different markets open in different time zones. Therefore, you may not know the right time to trade as a newbie.
However, trading with a free forex demo account can get you the idea for each time zone. Through practice trading, you can find the right time to trade for your intended currency. Besides, traders may not see the price movements except for some allotted time. So, you can understand the best time to trade properly when you practice for a while. Hence you can apply this in your real trading account. Get the best trading time that suits you and implement them in your practice as well as your live account.
Access to the Realtime Chart and Quotes
Charting and quotes are the features of the forex trading platforms, which gives the ease of trading; however, understanding the charts is not a piece of cake. You will need to understand them and learn them before you take the data for your trading. So, a demo account will help you to earn knowledge on forex charts and quotes.
How to Open a Forex Trading Demo Account?
Opening a demo account depends on the broker. However, almost all the brokers have the same policy and procedure to open a demo account. So, you need to do a simple and quick registration process. First of all, open the registration form on the intended broker's website and then fill it up with all the required information. Then you will receive account information and the trader's password. Next, you can start a demo trade by downloading the platform. Next, explore the offered market and instrument and start trading according to your strategy.
Steps to use a Forex Demo Account
As you already know the benefits of a forex demo account, you need to follow some steps to avail those benefits. After closely monitoring all the strep we provided below, you can know the ways to use a free forex demo account perfectly.
Create a Trading Plan
The very first step will be creating a trading plan which you can also use for your real account. While you create a demo account for experiment purposes to see which plan suits you best for you, you will need to follow some effective steps to create a trading plan.
- Define your trading time in the plan. Try to find the best time for your trading and stay on that time every day.
- Select the currencies you want to trade. Not all currencies and markets will be the best way to implement your plan. So, the demo account will be the best way to choose your tradable currency.
- Develop a strategy and check it with your plan. If that works fine, you can keep it and alter it if it does not work.
- Risk management is a vital portion of trading. Therefore, decide through the demo account about the risk management tool you want to implement. This can help you in future live trading.
Maintain a Trading Journal
It is great that you are getting access to a trading simulator for free. But when you move with the live account, it is recommended that you follow a trading journal. Hence, if you make a habit of practicing it from the beginning through the demo account, you should not face any problems further.
Maintaining a journal is easy. You can log your historical trading activity to the journal and observe them over time. However, the historical data will not always be the same, but you can get an idea about the trend and create or alter your further trading plan.
Create a Goal Toward the Live Trading Account
It is obvious that you will not operate the demo account for your whole life. You will move to a live account one day. So, you should create a solid goal on how you should move. You can set the goals while trading via a demo account. Besides, you can also create a goal for your demo account, which may eventually help you create a goal in a broader sense.
Setting up your Demo Account
You can set up a demo account in a risk-free environment through a few clicks. After getting the login info, you can enjoy the features such as
- Trading ability on any devices, for instance, Mac, Windows, iOS, Android, and more.
- Get access to real-time news alongside the free data on the market status.
- Most of the brokers provide a well-written quick starter guide.
Based on these, you can decide how you want to trade. Besides, some brokers also offer free trading courses for trading as well as setting up the account. This might be helpful too.
How Long the Forex Trading Demo Account Lasts?
It totally depends on the broker and the trading platform. Most brokers offer demo accounts for 30 days while others may allow trading for 60 or 90 days. However, you should be able to access the demo account lifetime. But your balance will expire. However, you may also request your broker to fund the account again if it is finished within your accessible period.
How Long Should You Practice on Demo Account?
It is a debatable issue but depends on your capability. If you are a quick learner, you can spend less time on the forex demo and move to the live account. However, the experts advise trading at least 5 to 6 months before you jump into the live account.
Once you become consistent and learn all the mechanics of forex trading, you should be good to go. The only purpose of the forex trading demo account is to understand order size, position, opening and closing positions, and more. Once you have mastered these, you don't need to waste more time on a demo account.
Your trading style and psychology will be completely different when you have money on the line. So, moving to the real account as soon as possible will be a great idea.
Can you Make a Withdraw from a Demo Account?
You might have made a profit from demo trading and increased the money. Unfortunately, you cannot withdraw from a demo account. You will get the fund virtually, and you will be earning virtually too. Hence, you cannot bank those earnings, but it will work as an experience for you. However, you can switch to the live account anytime and deposit money.
There might arise some questions about the authenticity of the demo account. Newbies may think a demo account is like a real account, but the truth is demo accounts are not real. But everything inside the account will act as real.
Can You Transfer Funds from Forex Demo to Real Account?
Live account and demo account are two individual accounts. Therefore, there is no way you can transfer the fund within the accounts. Moreover, you are getting free funds on the demo account while the real account deals with real money. So, you cannot mix up the two accounts. So, it would be wise to join the real one whenever you are confident with your skills.
Things to Know before Initiate Demo Trading
Opening a demo account will not just get you healthy trading activity. Instead, you will need to know the ordering process. So, you should know some stuff before placing an order. Such as-
- A clear understanding of limit order and stop order.
- Time of order entry.
- Fixed and variable spreads.
- Trading lot size and mix-matching lot size.
- Trading server.
How to Choose the Best Broker for a Demo Account?
It is also necessary for the traders to choose the best forex broker for a demo account like the real account. However, for that, you need to check some criteria.
- Firstly, identifying the regulatory status of the broker is necessary.
- Need to know the broker's policies and structure.
- Fees and commissions.
- Spreads
- Have sound knowledge of the Trading platform offered by the intended broker.
- Customer support quality and time.
- Offered instruments and forex trading tools.
- Demo account's duration and accessibility.
- Educational offerings.
- Execution speed
Apart from these, you may also check out the forex broker reviews to pick the right broker.
Drawbacks of Forex Trading Demo Account
Since it is free for all, traders might think that demo accounts don't have any drawbacks. However, it contains some cons too. Demo accounts are not the ultimate solution for all. For instance, you will be using virtual money. Hence, no real money is involved. So, you might not put much effort into that. As a result, you may end up having no effective experience. Furthermore, you have nothing to lose. Apparently, you may not show enough attention to learn from the demo. On the other hand, if it was a real account, you ought to focus carefully as real money is involved with it.
CFD Demo Account vs Forex Demo Account
In terms of the activity, both are the same as both offer a trading simulation. However, CFD allows speculation on the result of the difference between opening and closing transactions. CFC demo offers indices, forex, equity, and commodities. On the other hand, the forex demo deals with variations of currencies.
Final Words
Even the final destination is the live trading account; the demo account is quite valuable. Many pro traders practice their strategies on a demo account before implementing them on the real account. However, gaining profit on a demo account through a strategy doesn't ensure success on a live account. So, you cannot omit the risk factors. But you will certainly understand the trade structure through the forex demo account. Find the best forex brokers for demo trading.
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