Forex demo is a type of account that is quite commonly used in the foreign exchange market. This is a type of virtual account that Forex exchanges provide to all types of traders. For the purpose of testing features before actually entering the Forex market. If you know how to make the most of the features that a demo account offers, traders will gain a lot of experience and improve their ability to trade successfully. learn more specifically about this special account type with Learn Forex Trading, as well as learn how to quickly open a Forex demo account in the following article!
Learn what Forex demo is.
Almost all forex brokers today provide traders with virtual accounts, also known as demo accounts. This account is used by everyone for the purpose of exploring the market, as well as testing traders’ strategies. In other words, a Forex demo account is a perfect simulation of a live account. It possesses all the tools and features like a real account to meet the needs of users. However, the demo only applies in a virtual trading environment and cannot be converted into money that can be used for trading like a real account.
What is the difference between a Live account and a demo account?
Have you ever wondered what the difference is between a real account and a demo account? As mentioned earlier, a Forex demo account is no different from a real account. Meaning, you can make trades using all the complex tools and features. The only difference is the existence of money. For real accounts, you can use funds to conduct transactions. At the same time, withdraw money from the account to perform some other necessary activities. However, for demo accounts, it is a form of virtual money. Understandably, when trading in a demo account, you do not have to worry about risks. Thereby, the opportunity to make money is just virtual, completely unreal.
See more: Summary of new updates on Forex trading platform
What are the advantages and disadvantages of trading in a demo account for traders?
Usually, Forex demos in the Foreign exchange market are set up for beginner traders. However, there are many veteran traders who come to this account to test their campaigns. If you know how to take advantage of it, a demo account can become a powerful tool for you. Otherwise, it will leave serious consequences that no trader wants to suffer. Below are some advantages and disadvantages of this type of account that you can refer to before deciding to use:
Highlights of the Forex demo account
Using the Forex demo can bring many trading advantages to traders such as:
- Demo accounts will help new traders get acquainted with the features of the platform. At the same time, it helps them understand how the foreign exchange market works. That’s why they no longer feel confused when operating in a real environment.
- Using a demo account to conduct trading is a risk-free investment. Because this is a virtual account, it does not have the nature of exchanging real money.
- For veteran traders, you can use a demo account to test strategies. Through that, traders can test its effectiveness and see whether it brings the best profit or not.
Some limitations of Forex demo for traders
Besides the outstanding advantages, the Forex demo still has some limitations that should be noted:
- Trading conditions on a demo account will not be the same as a live account, for example: incentive programs, leverage levels…
- Because of its risk-free nature, traders will not be able to experience emotional changes. That leads to difficulty controlling emotions, affecting trading as well as making it difficult to make the right decisions.
- If the actual trading order deviates from the prediction, the trader will lose patience and break the set principles.
How to open a simple Forex demo account
Once you have a firm grasp of how it operates as well as some advantages and disadvantages of the Forex demo account. If you decide to use it, then let’s learn Forex yourself to learn how to open a Forex demo account simply and quickly. To make the process easier to understand, the following is an example of how to open a virtual account on the ICMarkets platform – a platform that operates according to the rules of the STP Forex exchange.
- Step 1: Visit the official homepage of the ICMarkets system => Select “Try a free demo” in the right corner of the screen.
- Step 2: Fill in the information according to the request form of the ICMarkets system. Include: country, full name, email and phone number => Click “Submit”.
- Step 3: Continue filling out another form regarding your choice: trading platform, account, currency… => Select “Proceed”.
- Step 4: Once completed, the trader will receive a notification of successful account opening. To log in, you can check your account information via your newly registered email address.
So you now own an ICMarkets demo Forex account. In case you want to open a new demo account, just press the “Open new demo account” button.
See more: Instructions for opening an ICMarkets account
How to get the most out of Forex demo functionality
Discovering the potential and making the most of the functions a demo account offers is an important factor in helping traders achieve success. So how can you use virtual accounts properly, bringing high efficiency and low risk? With just 4 things, the Forex demo will definitely help you become a good trader, specifically:
Learn and get familiar with demo account trading
To use it fluently and take full advantage of the features the exchange provides, you first need to understand the platform. This is not just for analyzing factors, but you need to understand how transactions work, as well as their configuration and parameters. A demo account is a tool that helps you do that easily. You can even test campaigns, and open and close orders to reference the market without worrying about risks.
Learn to control emotions
It can be said that emotions are the enemy of Forex traders. Because this is a factor that comes from personal psychology, you cannot completely eliminate it but can only control it. If you apply this to a real trading environment, you will likely fall into a quagmire and cause serious losses. However, when you know how to use the role of a Forex demo account, everything seems to be solved more easily. That means you can do simulated trading to get used to losing, then set up trading rules and plans to manage risk and handle emotions.
Choose the appropriate Forex demo leverage level
The final result when investing depends on the leverage level you choose. Because it directly affects the parameters, trading volume… The higher the leverage you use, the higher the risk of losing money in your account. Therefore, you need to choose wisely so that the leverage level is suitable for your finances and strategy. To know if it is suitable or not, traders can test it through a Forex demo account. Then provide effective analysis and treatment before making real trades.
Develop and test demo account trading strategies
Unlike the introductory purpose of new traders, experienced traders use Forex demo accounts as a platform to test strategies. This helps them experience trading and accumulate new knowledge. At the same time, check whether the idea or strategy has a risk of losing money or not.
Summary:
Through the above article, Learn Forex Trading has pointed out the differences, how to take advantage of them as well as instructions for opening a Forex demo account. Hopefully, this article will help traders gain more useful knowledge and increase their chances of success when conducting real trading. If you are interested, follow Self-study Forex to learn more interesting knowledge about Forex.
FAQs:
Is the demo account accurate?
Forex demo is not always guaranteed to be as accurate as real trading. It is set up to help traders get acquainted and test strategies based on reference properties.
Is it possible to withdraw profits from a demo account?
No, because the balance in the Forex demo account is only virtual money. That means you absolutely cannot use it to withdraw profits or trade.
How long can a Forex demo account be used?
The duration of using a virtual account depends on the regulations of each broker. Most Forex brokers offer unlimited demo accounts. However, some brokers impose expiry periods ranging from 30 to 90 days. When due, the account may be disabled or require a deposit to continue using.
