What Is Forex Demo Account? Learn How Demo Account For Forex Works
Forex demo account helps traders to trade with virtual money with zero risks. Without investing the real money, you can test the platform and build strategies.
Besides, a demo account is free for traders. On the other hand, forex or currency trading is a bit difficult for novice traders. So, it will help traders to know about ins and out of Forex trading.
Perhaps via online, you will get educational blogs and articles which will give you a clear concept on Forex trading. But there is a huge difference between practical and theoretical learning. Via a demo forex account, you will understand the currency market effectively with different trading strategies and analysis.
The article is well designed with all information related to forex demo trading account.
Trading has never been so easy for anyone. We aim to show you the easy path through this article. Let’s open the chapter to know why you should use a demo account before investing real money.
What Is A Demo Account
A demo account is an account that offers by almost all trading brokers. It is the best trading tool for traders to practice a trade. Apart from the risk, there are no other differences available in a demo account.
As we mentioned before, the trading account is full of virtual money. So, traders can execute trades without any monetary risk.
The forex demo account has no time limit. However, for all broker, it is not applicable. But as an expert trader, you can use a practice account to build new trading strategies.
Demo trading was started when people used to trade on paper. American traders were the first who started to use by using high-speed internet connection.
Now, let’s move to the point where you will see the process to open a demo account.
How To Open A Demo Account In Forex
Opening a demo account will give you access to trade via virtual amount.
You can explore the platform to know the broker features. In the first place, it will give you a live market experience. The different platform has different instruction for opening an account.
Some broker has their proprietary trading platform and some broker except MT4, MT5 along with WebTrader to trade assets.
Nevertheless, most of the platform will ask you for basic information of yours. Eventually, it is wise to open more than one account to compare the broker platform.
Besides, you can switch to the real account by depositing a minimum amount whenever you want. Traders do not need to verify their trading account by sending legal documents like a real account.
On the other hand, opening a Forex demo account Meta-trader4 is different. However, it will depend on a particular broker.
When To Use Forex Demo Trading Account
There is no particular time for using a demo account. For new traders, it is mandatory to use a demo account before opening a live account.
The key feature of a demo account is to understand the trading platform. For the new trader, it is impossible to know when and where to trade.
If you trade with real money without knowing when to open and close a trade, it will lead you a huge loss. At the same time, real money gives you more pressure and stress.
In forex trading, you must know how to set your take profit and stop loss. Besides, traders can practice different trading strategies via practice account. Especially who are expert in this field, consider a demo account as their loose-leaf notebook.
Once you are familiar with Forex trading, then you can trade with a live account.
But, trading with a practice account for too long is dangerous for traders. We will discuss the reasons in this article.
Demo Forex Account Advantages
It is hard to differentiate between two broker’s demo accounts. The available features are almost the same. At we have mentioned to you earlier, a demo account consists of various advantages.
Here are those advantages listed below-
- Understand the platform
- Learn how and where to place a stop-loss order.
- Usage of Forex indicators
- Develop trading ideas
- Understand the Bid and Ask price
- Learn how to use moving average
- Practice different trading strategies
- Real-time market data
- How to use money management
- Build trading skills with theoretical knowledge
Is Demo Account Harmful?
Trading with a demo account for a long time can bring some undisciplined behaviour in trading methods. At the same time, you will not look into your mistakes. On the other hand, traders will fully dependent on a demo Forex account.
Remember, you are dealing with virtual money which has no tangible value. It is hard to change bad trading pattern once you get used to with it.
Also, usage of margin is not applicable for demo traders, though demo trading is not a complete waste. Except for the risk level, you will get all functions similar to a live account.
Difference Between A Demo & Real Account
There are two major differences between a demo and a real account. First one is execution and the last one trading.
There are also some minor differences available.
- Trading emotions are different
- No re-quoted price for demo traders
- Sometimes it difficult to access the full trading platform
- Unable to trade with all assets.
- Trading risk is not the same
- The trading practice is not disciplined
- Liquidity level is different
- A demo account has a static spread.
- Zero trading pressure
The minimum deposit amount varies from broker to broker. Try to deposit the same amount of money that you are planning to deposit in your real account
Psychological Differences In A Demo Account
There are also psychological differences between a Demo account and Live trading account. Understanding the trading psychology is important to avoid risk. It is not easy for traders to see his hard-earned money is going in vain.
During the first trade, you will find butterflies in your tummy. After continuously trade with a live account, you will find it easy. It will also build up your trading skills. Remember, the virtual money will be back after losing trade in a demo account.
Firstly, there is no risk involved in a demo account. For a live account, you have to set proper risk management. Moreover, it is not possible to ignore losses and start over without damage.
Secondly, over-trading is the biggest mistake for Forex traders. Remember, lack of psychological preparation will lead you to do over-trading.
The third difference is that traders invest amount based on emotion and come up with a huge loss. You might see yourself committing sins while trading with real money like moving your stop losses, early cutting off winning trade, and also revenge trading.
The fourth thing happens when a trader continuously wins through a demo account. It will make you overconfident. Overconfident traders forget about trading discipline and proper trade execution.
Lastly, avoid trading with over-leverage. A trading plan can also help you to control your trading psychology.
Success from demo trading does not mean that you will get profits after trading with a live account. No doubt, it is challenging for you to hold your emotion and stay focused while trading currencies. Remember that a solid mindset will help you to trade well. So, make your Forex concept strong as much as you can.
How To Avoid Trading Loss
Trading is not a peaceful work. Earning profits from each deal is only possible if you know know how to avoid trading loss. A demo account will not help to minimize your trading risk. You can only practice and improve trading skills to build a strong base.
The primary rule for traders is not to focus on profits from the beginning. Focus on your goal and trading process.
Expert traders always make a plan for daily trade. You can also create a weekly plan though it will change depends on the market scenario.
Review your plan at least one time before trading, whether it is right or wrong. On the other hand, proper risk management will cover up your loss. It will also help you to concentrate on your trading, and remove trading pressure.
Another good way to be a better trader is to repeat the previous trading history. Maintaining a proper trading journal will help you to see where to improve and where to not. Via trading journal, you can also keep a track of your all winning and losing trades and.
Remember, in currency trading, keeping success history is a good habit.
How To Trade With A Live Account
Live trading account holds a trader’s emotions. Forget about emotions though, it is a bit difficult for traders. Trading emotions can bring a bad result.
To help you, we are here with some tips and tricks:
- Accept your trading loss
- Make a concrete plan with strategies
- Trade an amount that you can bear losses
- Minimize your trade quantity
- Pre-planned your trade before opening a position
- Research the marketplace
- Maintain your professional trading mindset
Demo Account Trading Time
The demo account for forex trading is suitable for both novice and experienced traders. If you want to know more details on currency trading, then you can read our article What is forex trading. It is a complete guide for forex traders, who are new and want to learn more about currency trading.
There is no time limit in a demo account. You can practice trading anytime from anywhere. However, some broker’s demo account expires within days.
On the other hand, some broker will keep your account active until you are ready to trade with real one. Moreover, a demo account allows traders to apply strategies. You can also develop your trading skills without any time limit.
Remember, each day will count before hitting in the real trading world. You can also open multiple positions at the same time by choosing different currency pairs. Better to practice your trading with those accounts, which will not expire.
Mobile Trading App
Mobile trading application is suitable for them who wants to trade while travelling the world. More or less all trading brokers offer demo account for traders which we mentioned before.
On the other hand, you will find a mobile application depending on your mobile device. The mobile trading platform is as same as the desktop device.
Both ios and Android application are available for traders. You have to download it from the Google play store or Apple store. Via mobile demo trading app, you can practice your trade with your favourite currency pairs anytime at anywhere. Eventually, you will discover the world in the palm of your hand.
Finally, we have to drag a beautiful ending. We almost tried to cover all points that are related to the demo account. To be a successful trader you have to improve your trading process and create a good habit. Experiencing different trading environment is also helpful for novice traders.
Make a plan to improve your trading success and follow us to know more details about Forex Trading.
“Having a trading discipline is the beginning, keeping discipline is the processing, and staying disciplined is a success.”