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Forex demo account: what is it and how it will help a novice trader

Every person who wants to start trading on the Forex currency market fears only one thing — how not to lower the first deposit “down the pipe” and not beat off the incentive to trade from the very first day. This risk factor is the main barrier to starting a trading career.

The path to the forex market is through a demo account

Good news for those who are already ready to touch trading, but still do not know at all where the “start” point is. Forex gives you the opportunity to first practice and hone your skills in the field. Without opening a real cash deposit. This feature is called a demo account. In today's realities, almost all brokers have made this option available. You can open a demo account, "absorb" the basics of trading, get your hand in closing deals — and all this is freely available. Let's understand what a demo account is.

What is a demo account in forex

Demo accounts (we will also call them demo accounts or simply demo, demo) is a separate type of account. It opens in the trading terminal. Also, to open an account, use the website of a brokerage company. Who is comfortable. The bottom line is that the opening fee is $0.00. The only thing that distinguishes the demo from the real account is that here trading takes place using virtual currency. Otherwise, it is an exact copy of a real deposit. Currency prices, indicators, trends, charts, timeframes are completely real, exactly the same as on a paid account. All data is based on real forex market quotes.

In other words, the demo is a 99.9% clone of the real account. Here you can apply any trading strategy that a trader implements on a standard account. Technically, the account is “stuffed” as well, there are no software differences. Visually evaluating the demo trading process, there is no chance to distinguish this procedure from real trading on your own deposit.

Advantages of a forex training account

The main ones are:

  • There is a chance to master the trading platform of a particular broker, understand it, get used to the functions and interface.
  • Using a demo account, a trader gains fundamental skills and can immediately use the trading tools in practice.
  • This is an ideal option for beginners in trading. Here you can feel out your first trades and conclude whether trading is interesting to a person at all.
  • An experienced market participant will be able to test new trading methods and strategies on a demo. No risk of losing real money. Demo is, in fact, a laboratory, here you can put all sorts of experiments and experiments.

Based on this, it is a mistake to think that trading on a demo account is suitable only for novice traders. Yes, these accounts were created with a focus on new market participants. However, a large proportion of experienced players often come here to try changing the currency pair or a new trading tool.

How demo accounts work in financial markets

All forex brokers provide a demo option. Although it is built everywhere on identical principles, registration and opening procedures may differ in some terminals.

For example, there are sites that provide a demo account for a certain period. No limit on the number of openings. Therefore, you will open an account, and it will be closed after a while. But you can immediately create a new one.

All demos have their own deposit limit. For example, 10 thousand virtual currency. When the deposit is exhausted, the demo will automatically close. Upon closing — one of two things: either you can open a new account, or the account will be restarted automatically.

The key is that a demo account on Forex does not oblige traders to anything. If they wanted to, they stopped trading, the account closed on its own, as if nothing had happened. The maximum loss during trading is the time spent on registration and verification. It's literally minutes. A more than equal investment in exchange for a free platform to start trading.

forex practice account

In addition, do not forget about such a life hack as a no deposit bonus. You register on a demo account, receiving money for this on a real account. The order of the amounts paid is in the range from 5 to 50 dollars. A trader can use this money for real, having previously honed his skill on a demo account. Isn't this the optimal scenario for an effective entry into the forex market?

Demo Account Opening Procedure

Almost every broker today gives access to demo accounts. They get their benefit in the form of new traders coming to the real markets. Judge for yourself. When a trader has practiced on a demo of a particular broker, he will most likely want to continue and engage in real trading there.

When entering a real market, the trader will already be filled with experience. This increases his chances of profit. Accordingly, for profit for the broker.

The benefit of demo trading on the stock exchange for an experienced market participant is also obvious.

This is a way to work out a new strategy, as well as to test new currency pairs. Or the trader wants to switch to a new asset. Maybe for some exotic couple. And to put such experiments in "combat conditions" is unreasonable from the point of view of money management. Here, again, everyone gets benefits — both the trader and the broker. After all, it is beneficial for the latter to provide the client with such a convenient opportunity. That will strengthen cooperation on a real deposit.

Action algorithm

First, choose a broker. With most of them, we will not be able to open a demo forex account without registration, at least the minimum one. We register on the broker's website or on the Traders Union portal.

Upon completion of registration, the trader should download the trading terminal. The choice is one of several that are in the broker's arsenal. What is important and very convenient is that all popular terminals have not only a version for a computer, but also a web version, as well as a version for a smartphone.

Further steps for opening an account depend on the chosen broker and trading platform. However, in general, the sequence is identical. The trader chooses a demo server and opens the first trading account.

There are brokers who have it even easier, although it would seem that there is nowhere to simplify. For example, RTrader opens the demo automatically. Immediately upon completion of registration.

The official website of the broker will definitely give the trader instructions on how to open an account. Manuals are constantly changing as new versions of trading platforms are released. After all, with the update of the version, both the interface and the procedure may change a little. At the same time, there will be no difference if the same trading platform is used, but with different brokers. The only difference when opening an account will be that we get to the platform through different servers.

Exchange trading: demo account

Recall that the key benefit when working with demo is the work of a trader on the same platforms, both in the demo version and in the real one. Accordingly, when a trader decides to switch to a real deposit, he will not feel the difference. And continue trading in the familiar environment.

The most popular trading platforms with demo accounts

The following terminals are in the top among trading platforms:

  • MetaTrader 4 (MT4) + web version,
  • a similar platform of the 5th version (MT5) + web version and mobile version,
  • RTrader (as well as a web version and for a smartphone),
  • Forex4You (in regular and web versions),
  • cTrader.

The most popular among traders are the MT4 and MT5 platforms. This applies not only to demo accounts, but also to real trading. 

demo accounts in financial markets

As mentioned above, most terminals have a mobile and web version. The web-execution of the terminal often differs slightly from the desktop one. What can not be said about the smartphone version. Here we usually have an optimized version, with a slightly simplified functionality. However, through any type of terminal, you can easily open your first demo account. Just follow the prompts on the monitor. Regarding collaboration with operating systems, all of the above sites are made for both iOS and Android. There are no questions about browsers and operating systems. All of their varieties are suitable for opening a demo account.

Most of the market participants use the standard version for trading. For those who are always on the go — a more convenient option for smartphones. The main thing is to catch the Internet signal. If you do not have a very powerful PC filling, then for effective trading, an online demo account in the web version is what you need. All operations are carried out directly in the browser window. That is, the load on the hardware of the computer is minimal. Another plus of the mobile and web versions is that if you tried after installing them and didn’t like something, it makes no sense to waste time installing the computer version.

Forex demo account on the example of MT4 and MT5

As mentioned above, MT4 and MT5 are the most commonly used trading terminals. Differ in simplicity, convenience and functionality. There are updates in the 5th version, but they touched more on the "visual" and the comfort of perception. The basic functionality for trading has not changed significantly.

The sequence of steps when opening a demo in these platforms is not significantly different. Here are the basic steps. First of all, the trader downloads the trading platform from the official website of the broker. Then, right on the site, he registers and passes verification. The next step is to install the downloaded trading terminal on your computer. Having installed it, double-click on the shortcut and dive into the world of financial markets. When the program is first launched, the user will be prompted to select a server. After all, each broker has more than one server in its arsenal. This is provided to distribute the data rate, depending on the region. Transfer speed is also called ping. So, it is recommended to choose a server where the ping is minimal. Further work will continue in the installation window.

Then the user is redirected by the program to the site, namely, to the trader's office. Next, enter this office. Select the "Accounts" button on the panel and indicate that you need to open a demo account. Here we can see under what conditions access to the account is granted. For example, limited in time with a limit of 30 days.

Having opened the demo version of exchange trading, the user can set his own parameters of choice:

  • leverage;
  • currencies.

As for choosing the deposit amount, not all terminals have this feature. With the final click, the broker opens a demo account.

Then the market participant can immediately start trading. To do this, he just needs to return to the terminal, select "File" and click "Connect to a trading account".

Some brokers allocate special servers specifically for demo trading. They contain the word "demo" in the name. A novice trader should choose just such a server. And in the process of trading, as soon as a market participant needs to change his choice, everything is available in the “settings” section. Since MT4 and MT5 are adapted for the Russian-language version, if questions arise, the user will find all the answers on brokerage sites or on the Internet.

What are the nuances to pay attention to

The visual design of the web version of the trading terminal may be slightly different than in the software (desktop) version. The convenience of a particular web version is that you do not need to configure formats and interface. After all, the transition is carried out through brokerage sites. And in this case, the key settings are preset by default.

The procedure for opening a forex demo account here is absolutely identical, as in the desktop version of the trading platform. The only difference is that there is no need to "jump" from the browser to the program and back. All operations are performed directly in the browser. Including server selection and account type. As well as entering the main parameters — currency pair, leverage and deposit amount.

Regarding the size of the virtual deposit, it would be optimal to stop at about the amount that you eventually choose after a while and on the real account. This is true if the possibility of choosing the amount is provided.

For a currency pair, the same logic is not required. As experienced traders know, an asset should be chosen carefully and carefully. Taking into account such factors: the country of residence, sources of information about the predicted change in quotations, the trading session in which you plan to actively participate. And a novice trader who has just downloaded a trading platform is unlikely to have fully carried out a deep analysis regarding the currency. In this regard, you should not get hung up on the choice of a currency pair at this stage. It is enough for a beginner to take a standard Euro/Dollar asset into work.

Forex demo account

Next, we can choose the leverage. You should not immediately start with a large shoulder size. This is fraught with a quick loss of a deposit, albeit a virtual one.

But, having developed trading skills to a certain level, it still makes practical sense to choose a large leverage. At least once. In case of a successful transaction, the beginner will see what a good profit looks like on Forex. In this way, experience and self-confidence are gained.

Well, in terms of trading, trading a demo account is a process similar to a real deposit. All key options are available here. Quote charts, a set of timeframes, pending orders are available. The account will be closed after the time limit has passed or the virtual deposit has been exhausted.

Summary

Let's summarize what we've read.

A trader has the right to trade within a demo account using any available type of the selected trading platform. For example, you open an account in the web version of MT5. Then you can launch the desktop version and see that there is access to an already open demo. With a smartphone, a similar story. The account can be opened using the mobile version. This is the most convenient option, since smartphones always have simplified and adapted versions of terminals. It is worth paying attention — most good brokers do not have the opportunity to open a forex demo account without registering online. In principle, this is not a problem. The number of fields in the registration form is usually minimal.

Regarding convenience, the choice here is purely subjective. Everyone prefers a desktop, web or mobile platform. Since the selection criteria are different for everyone. Each version will provide you with effective functionality, demo account management, opening/closing orders, analysis of charts, signals, indicators.

The benefit of the mobile version, of course, is that you are not tied to a stationary PC and, accordingly, to a specific location. You can close deals even on the beach. The web version is convenient due to the ability to work directly from the browser.

However, many traders still use the desktop version of trading terminals. Apparently, because of the reliability. Since there is no dependence on the operation of a particular browser. And also from the instability of the mobile Internet. In addition, not everyone will suit the set of functions of the mobile version. Because it is simplified and does not contain the full set of features.

Demo account benefits:

  • For a beginner:
    • A real trading terminal and a real Forex market are available.
    • Opportunity to test the functions of the trading terminal in detail.
    • No risk, since trading is carried out with a virtual deposit.
  • For experienced traders:
    • Experimenting with new strategies.
    • Testing new currency pairs, order parameters and other instruments.
    • Testing different leverage sizes.

Disadvantages of forex demo accounts:

  • For a beginner:
    • Since the deposit is virtual, the perception of risks is distorted.
    • Until the trader opens a real account, there is no income.
  • For an experienced player, there are no obvious shortcomings. 

If something in the topic of demo accounts remains undisclosed for you, you can get advice from our specialists. When you need hot clients for the financial market, new traders, or there is a need to develop brokerage platforms, our company offers a forex lead generation service with a guarantee of attracting target customers.

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