Forex Demo Account
Risk is a part of Forex trading and as many traders have found out the hard way, even a small error can make you lose money. Luckily, the availability of demo accounts has significantly lowered the risk of Forex trading. With demo accounts, you have the option to gain valuable experience in Forex trading without actually putting your money in the line.
What is a Forex Demo Account?
A Forex Demo Account is nothing but a trading account that allows you to practice trading in foreign currencies. It is only a false account that is available as a free service. Usually, traders do not need to deposit a sum of money to activate this account.
A Demo Account, also known as Practice Account, does not hold genuine cash. It contains only play cash worth up to $100,000. It is given to potential Forex traders as part of a marketing strategy of a broker. A demo account is mainly given to motivate investors and allow them to get some experience in Forex trading before they actually begin transactions with a live account and their own money.
If you are interested in trading in Forex, you must open one demo account and have a fair amount of practice before you actually start trading. Most brokers and Forex platforms provide their client with free demo accounts to help them gain confidence to open a live account.
Types of Demo Accounts
Many banks offer potential traders three different types of Forex Demo Accounts. These include:
These allow beginners to place orders, test strategies and enter limits and stops. It also allows use of all features and tools associated to a real Forex account. These offer features like:
- 3 pips spread
- Dealing room services
- 1% margin
- Up to 500:1 leverage
- $500 Minimum deposit
These have the functionality of trading lots and offer features like:
- 2 pips spread
- Dealing room services
- 1% margin
- Up to 200:1 leverage
- $10,000 minimum deposit
These offer features like:
- 1 pip spread
- Dealing room services
- 1% margin
- Up to 100:1 leverage
- $250,000 minimum deposit
The variation in types ensures the greatest possible flexibility to clients and helps them satisfy their expectations. Different types of accounts use different leverage approaches. They cater to traders with various sizes of portfolios.
Forex Demo Account Benefits
Know about some of the main benefits of Forex Demo Account.
-Demo accounts provide new, inexperienced traders with vital information about the different types of strategies that they can use. Traders can understand what mechanism they can use and which strategies are risky. Even pros in the industry can use these accounts to try out a new strategy that they are not sure about.
Thus, they can help in achieving greater accuracy even when a person has achieved superior knowledge in Forex trading.
– A false account helps new traders practice the platform supplied by their broker and find out whether it is suitable for them. It also helps them try out the other services provided by their broker.
– Opening such an account allows you to trade without risk. Even if you make a bad trading move, you will not have to face any consequences. Once you are experienced in trading, you can easily make the switch from demo accounts to live ones and conduct actual trades. You will be at a much lower risk of monetary loss due to inexperience in trade. Practicing with demo accounts will equip you with the ability to conduct real trades with ease.
– Most demo accounts are available with the option to make an initial deposit. This helps you conduct high-money trades with the ability to multiply the leverage by many times. You can get accustomed to the actual potential of trading in Forex.
– This is a free service and you do not need to pay anything for download, deposits, management, membership or transactions. You can get as many demo accounts as you want from various platforms and try them all before you really settle for one.
Knowledge and experience are crucial to being successful in Forex trading. Demo accounts allow beginners as well as investors to gain both of these before they can make profits in foreign currency trade.
How to Open a Forex Demo Account?
It is quite easy to open a demo account for Forex trading. All you have to do is fill an online form. New users are typically provided with free, live training over the internet. This allows them to be aware of the market and various strategies that can be implemented while trading.
Typically, the process of opening a demo account involves the following steps:
- Opening the account online
- Depositing money into the account. Potential traders can open account through check, credit card or wire transfer.
- Installing the Forex trading platform into the computer
- Once the platform has been set up, a new user can sign into it by clicking Login-Demo and furnishing his/her Login ID and password.
A demo account typically help traders increase the refinement of their transactions by $25,000. Often, it provides traders with valuable information, visuals and viewing charts to help them recognize profitable investments.
Demo Accounts and Forex Simulators
Demo accounts are excellent for their ability to offer a risk-free trading environment to users and provide them with important information about actual transactions. However, they have a big disadvantage. New traders have to spend a lot of time in studying Forex trade. This is mainly because the changes in financial market are quite slow. Luckily, there are Forex simulator apps that let you implement strategies and view their actions very fast. The strategies are applied in an artificial trading environment that closely resembles a real one.
With software applications like Forex Tester, you do not have to wait for Mondays to implement your strategy. If you are ill or stuck with some other issues, you do not risk postponing your strategy. You can implement it at any time you want.
With Forex Tester, you can
- Test a trading strategy at any period from history
- Try it at any time that is suitable to you
- Restore or cancel your trade at any time
- Control speed of testing your plan
- Test the strategy on the same period for multiple times with changed parameters
Like with demo accounts, you have the privilege of gaining valuable trading skills without putting your own money in the line. However, you get much more features than demo accounts can offer. The biggest benefit that Forex Tester gives is the ability to gain valuable trading knowledge in a few days rather than several months. The application allows you to view, upload and review data at any time from history. You can pause, fast forward or rewind the software to test and retest the strategies that you have picked up.
eToro Demo Accounts
One of the biggest Forex trading platform suppliers, eToro offers free demo accounts to its application users with. These are available with virtual money worth US$10,000 and allow newcomers to practice trading until they are ready to begin actual trading. It also offers to new investors a welcome bonus that can be as high as $200. The account is provided absolutely free of cost. Etoro provides its users with the option of using an unlimited number of Forex demo accounts. If you exhaust your initial fund that is meant for practice, you can get more funds very easily. All you have to do is hit the “click to deposit” button located at the practice section. A single click will help you get the extra funds that you require for further practice.
The demo account of eToro is an exact replica of the actual trading account it offers. The company also offers demo trading challenges to new users that can help them make some money without putting in a penny.
While Forex demo accounts are available from many other online trading platforms, the one from eToro is one of the best in the market. It grants enough practice money to allow traders to have good practice before they can start trading for real. Once new investors gain enough experience and ease with the platform, they can start with little amounts and build up gradually. This helps them become successful in Forex trading without making loss, unlike most new investors do.
eToro also offers a wide variety of information and training through courses. These offer an almost step-by-step guidance to new traders and help turn into professionals.
Enticed by the thrill of real action, many novice traders make the mistake of rushing into Forex trading. Naturally, they fail and lose the hope of making it big in foreign currency trades. Forex demo accounts safeguard new traders and investors from such initial problems and allow them the opportunity to practice until they are sure about their abilities. Practice, as they say, makes one perfect and demo accounts ensure that you are not denied of the chance to go after perfection.