If you are new to forex trading, then an obvious question that will pop into your head is what is a forex demo account, and how can you trade with it? A forex demo account is a type of account provided by trading platforms funded with virtual money and allows you to test out the trading platform and its various features before deciding to open a real account with real money.
Many beginners have no clue about demo accounts and how they work. In this short guide, we are going to answer these questions and explain why you should start trading with a demo account.
What is a forex demo account?
If you are familiar with gaming, think of a demo account as a simulator. The simulation game tries to replicate various events from real life in the form of a game. Like simulation games, demo accounts allow you to do this on a computerized simulator. The virtual trading environment allows you to familiarize yourself with the platform while practicing and honing trading strategies.
Using a demo account allows you to gain confidence in your trading decisions. You can easily trade without worrying about mistakes. These accounts allow you to monitor market conditions and experiment with various charting tools and indicators. Whether you trade Forex, Stocks, or Commodities, there are demo accounts available for you to try out. Using forex demo accounts you will learn how to choose the best forex demo account.
Taking the time to learn how each platform works will allow you to determine which one best suits your trading style. Demo accounts are also common among traders who are proficient in forex trading but want to try their hand at other assets too.
Even if you have extensive experience in forex trading, you may want to open a demo account before investing in forex, commodities, or stocks. You may have seen ads all over the internet, or if you surf on financial sites, you are often aware of many advertisements that try to entice you to open a demo account.
Most brokers offer a demo account for free, but why is it free?
Since the broker wants you to fall in love with them and deposit real money, they want you to learn the ins and outs of their trading platform and have a great time trading on a demo account. Let’s dig deeper and learn how demo accounts became a staple in the financial markets. Read
Why should you start trading with a demo account?
“Do not open a live trading account until you have successfully traded on a demo account.” This is what the most experienced traders will tell you. If you can’t wait until you’re successful on a demo account, there’s a small chance you’ll be profitable playing real money and emotions.
You will need time to focus on improving your trading processes and developing good trading habits. You will also need to be exposed to different market conditions and learn to adapt strategies and tactics as market behavior changes. Imagine that you start trading on a live account as a beginner without knowledge of the Forex market, and in the first month, you lose all trading capital.
You don’t want that, do you? So, that’s why you should start with a demo account first. There are many websites offering you demo accounts such as TradersUnion.
The demo account is also relevant for those who are not able to control their emotions. Discipline and careful control are some of the basic requirements for successful trading, therefore, a trader must be able to assess the situation, deal with emotions, not rush or procrastinate. A forex demo account is an ideal opportunity to practice, learn how to face difficult situations. To trade on a demo account, you need to find a trader or a trading website that offers such an opportunity.