If you’re new to the Forex industry, then you may have already come across the term Forex Demo Account. Here we will explain what it is, what you can learn from them, and why you need them.
What is a Forex Demo Account?
A demo account is a type of Forex account offered by brokers to clients. It allows their clients to try out trading using their systems but with virtual money instead of real capital. Many brokers let their use a demo accounts without having to become a fully verified client first. A demo account usually comes with virtual money that you can use to test the broker’s trading conditions. These trading conditions are expected to be more or less the same as the trading conditions on their real accounts. Keep in mind that each broker may give you different time limits on the Demo account. They may also give you different amounts of virtual money to trade with. Some may even top up your virtual account if you ask nicely.
Who Should Use a Demo Account
Forex demo accounts are great for beginners and advanced traders alike, each with their own purpose or outcome. A new trader should always start practicing with one, two, or even several demo accounts to learn how trading works. Take your time and make sure you fully understand all the transactions on your account. That way you can be prepared to trade with real capital and make better informed decisions while you do so. An advanced trader can also benefit from using a forex demo account. Even if you have traded before, you should always open a demo account before opening a live account. This is because different brokers can have different trading conditions and different trading costs.
Why You Need a Demo Account
1 – Familiarising Yourself With Their Platform Use Demo accounts to become familiar with a broker’s trading software, as well as the instruments they offer and the prices they list. This is important because different brokers offer different conditions for trading. You can first try a Demo account and then move on to Real ones when you’re ready.
2 – Learning to Trade Demo accounts give you the opportunity to learn how to trade, and so see how how different principals of trading are applied to your account. You can try out Stop Loss settings in this testing environment, and you can see how leverage works too. In addition you can try out any strategies to see how well they perform before applying them to Real accounts.
3 – Trade Execution Time This is the time it takes for your order to be executed, measured in milliseconds (hopefully, since orders that take too long to execute on a Real account can give you unexpected results referred to as Slippage) It’s important to understand that brokers don’t normally have live price quotes running on their forex demo accounts. Each broker can have varying execution times on their real acccounts and demo accounts.
How to Open a Demo Account
Opening a forex demo account in a regulated broker is easier than opening a real account. This is because you do not need to complete the full registration process. Take a look on the broker website of your choice and open a demo account. You will typically need to provide some basic details about yourself. You will then usually be sent login credentials, as well as a link to a trading platform.
If you wish to learn even more about trading Forex, please visit our Forex Education section.