The importance of using a Forex demo account is directly attributable to the fact that Forex is a decentralized market- where dealers circulate their price feeds through proprietary platforms. As such, it becomes imperative on the trader’s part to acquaint himself with the features of each type of trading software before committing his funds to the same. This is where a Forex demo account helps traders. Let us explore the basics of Forex demo account in this post.
What is a Forex Demo Account?
A Forex demo account is backed by all the features of the live forex account. The only difference between a real account and a demo account is that the latter uses fake money instead of real money. A newbie trader gets the opportunity to practice trading with a demo account under real trading conditions. The trader, needless to say, can trade with the help of charts that are used in the real trading ambience as well.
The demo account is made available by the Forex broker who acts as your link to the Foreign Exchange Market by allowing you to trade. The broker is the one who provides you the trading platform. In order to try out the Forex demo account, you need to visit the broker’s (of your choice) website and then choose a link on the website which allows you to sign up for the demo account. Do not skip this step as this might leave you exposed to the threat of losing a substantial amount of real money- simply because you are not practicing thoroughly before executing your trades.
Most of the reliable brokers in the market offer demo accounts since they know how important it is for their clients to hone their skills before they are actually foraying in to the real world of trading. Needless to say, the sign up process is similar to that of the real forex account with the only exception of the process not requiring any amount of money. The broker will offer you a set of several thousands of fake dollars with the help of which you can practice. There are no “real” losses or gains involved here. Once you have set up the demo account your impending moves will be left on your decisions just as would be the case if you were trading with real account. The losses which you make while practicing with the demo account will not hurt you since you are trading with fake money.
Avoid being overconfident
Many traders commit the mistake of leaving the demo account too fast in favor of trading in real market. There isn’t anything wrong in claiming that overconfidence clouds prudence in such cases. A few cases of initial success with the Forex demo account lead them to assume that they can replicate their successful stint while playing with the real account as well. In reality, however, their eagerness of trading with the real account leaves them with half-baked knowledge- which, of course, is not conducive to long term success in trading.
Tips to select a demo account
The choice of the demo account depends largely on your choice of the broker. You should select brokers who offer you a free demo account with which you can practice for a substantial amount of time. The demo account should duly be backed by accurate market charts. The broker should also be regulated as well.
When it comes to choosing forex demo accounts or brokers you would definitely like to read the reviews earned by them. If you have a friend or colleague, who has been trading for a long time you can ask him for suggestions as well.
Recommended Forex Demo Accounts (FCA Regulated):
|UK, Cyprus & AU||NFA, CySEC, ASIC, FSA||Open Demo Account|
|London||FSA, ASIC||Open Demo Account|
|Limassol, Cyprus||FSA, ASIC, FSP and more||Open Demo Account|
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