As a forex trader or someone who is learning about forex, you have certainly heard of the MT4 platform. However, they still do not dare to invest because of lack of knowledge and fear of risks. One of the extremely effective solutions is to use the MT4 demo account. Join Learn Forex Trading to explore the Forex mt4 demo account, and learn about common mistakes that traders often encounter when trading on Demo accounts in the article below.
What is an MT4 demo account?
Forex MT4 demo is an account type provided to most forex brokers to meet the needs of customers to explore the market and test trading strategies on the MT4 platform. In other words, a Demo account is a simulated version of a real account (Live), with full features, and opening a demo account is completely free.
Demo trading is the practice of conducting test transactions on a Demo account. Use a platform that simulates conditions similar to the real market. On the Demo account, you are provided with some virtual money to participate in trading. In which all transactions take place on virtual media, with profit and loss numbers, balance, and leverage all being virtual.
With the “demo” funds that the platform offers, you have the opportunity to explore the trading platform as well as financial products, study spreads and test diverse strategies. Opening orders without real risk helps you develop your trading skills before entering the real world of trading where real money is used.
On the other hand, demo and demo trading accounts can be considered effective tools for brokers to “connect” with you.
See more: Let MT4 help you solve all your trading difficulties
Advantages and disadvantages of MT4 demo forex account for traders
With the above concept, the MT4 demo account will have the following advantages and disadvantages:
Advantages of MT4 demo account
- Helps new traders get acquainted with the features and tools on the trading platform. The demo account offers full features. Using a Demo account helps new traders get acquainted before switching to a Live account.
- A Demo account is a realistic simulation of a real account. Helps new traders understand how the markets work. Including how orders run, the order matching process, and profit and loss aspects.
- Demo accounts are a good tool for new traders to learn about basic terms in the forex market. Provides the most realistic view of margin, lot, pip value calculation, profit, and loss through actual data.
- Allows traders to test new strategies, robot EAs, or forex signals on a Demo account before making real trades. There is no financial risk, helping traders to prepare better before moving to real trading.
- The Demo account is a virtual environment, which does not require any payments from the trader. Allows for experimentation without facing real financial risk.
- The MT4 demo account helps professional traders test new strategies and test products they have never traded before. Although there are errors compared to real accounts, accumulated experience helps professional traders find the most effective way to overcome them.
Disadvantages of MT4 demo forex account
On a Forex mt4 demo account, trading conditions are often never the same as on a real account. If you do not recognize or evaluate the impact of this correctly. Many traders may feel distrustful of the trading platform. And they think this is just a form of fraud.
The difference in market conditions causes many traders, after success on Demo accounts, to have difficulty switching to real trading due to this difference.
While trading on virtual accounts, traders do not face any financial risks. There are no deposits or withdrawals of profits. Deprives them of feeling the actual emotions associated with wins and losses.
When switching to a real account, that feeling of “overconfidence” will become a weakness. If you don’t know how to control it, it can lead to incorrect trading decisions due to the impact of emotions.
Trading on an MT4 demo account also does not help traders practice patience. Since there is no financial risk, when an order goes in the opposite direction, the trader may be impatient and not follow the established trading system, creating a habit of breaking the rules.
Instructions on how to create a demo account on MT4
To start using the MT4 demo account, investors first need to have an account. Refer to the following 2 ways to own a demo account on PC or mobile platforms:
Create a demo account on MT4 on a PC
To open an mt4 demo account on PC, you can do the following steps:
- Visit the homepage of IC Markets at their website address. Click on the “Try a free demo” option to begin the demo account registration process.
- Enter full demo account registration information from the beginning. Minimize the number of fields to fill in compared to opening a Live account. Enter Refer ID as “16187”. Select the “Register” button to register.
- Immediately after that, you will be redirected to the demo account selection page. Select Platform as MT4. Keep the Account type as Raw Spread. Keep the Currency as USD.
- Select The leverage level according to the ratio you plan to use for your real account. It is recommended not to exceed 100.
- Initial Deposit: The initial deposit amount, is optional according to your preferences.
- Click “PROCEED” to continue.
- The next window will notify you that you have successfully created your account. Login information has been sent to the email you used to register your account.
- If you want, you can click “Download” to download the MT4 trading software.
Open an MT4 demo account on the phone application
Opening an MT4 demo account on your phone is not done directly from the trading exchange. Instead, you need to access the app store that corresponds to your phone’s operating system. MT4 on smartphones should more accurately be called MT4 app instead of MT4 software.
- For iOS users, they can go to the App Store. As for Android users, they can visit CHplay. Search for “MetaTrader 4” and download the app that appears first.
- If the application is using a language other than US and you want to convert to US. This can be done in the “Appearance” section.
- To perform MT4 login, select “New account”. Then, choose to sign in to an existing account. You have previously created an account on your exchange (e.g. ICMarkets).
- Enter your exchange name in the search box. For example, enter “ICMarket”.
- MT4 will display all the account servers. Select the server where you opened an account. If you don’t remember, you can check the information in the email the exchange sent when you opened an account.
- Fill in your account number and password, then press the “Log in” button in the upper right corner.
With the above steps, you can easily open an MT4 demo account on your mobile phone and trade smoothly.
How long should investors trade the MT4 demo accounts?
According to research, up to 70% of new traders trade on real accounts when starting to participate in the Forex market. Notably, 63% of them faced failure. Therefore, when starting to participate in the Forex market, using a Demo account before switching to a real account is a smart decision.
However, the question is: “What period of time should investors trade on a Demo account?”. Actually, there is no specific answer to this. For new traders, practicing and understanding the basics and trading signals is necessary until they achieve proficiency. To consider when switching from a Demo account to a real account. New traders need to meet the following requirements:
- Master all features and tools on the trading platform.
- The winning transaction rate must be 80% or higher. Because when switching to a real account, this rate can decrease significantly.
- Options strategies must have high performance on Demo accounts before applying.
- Capital management techniques and strategies, as well as risk management. Must be applied effectively on the Demo account and achieve positive results.
- Ability to adjust and control emotions in transactions on Demo accounts. To avoid surprises when trading on a real account.
See more: Opening and verifying an ICMarkets account
Some common mistakes when trading forex MT4 demo
With all the benefits that the Forex mt4 demo account brings. There are always common mistakes that new investors often make. Let’s take note to avoid following in the same “wrong footsteps”.
Trading on forex MT4 demo takes too long
Trading on a Demo account for too long can lead to traders losing the ability to regulate their psychology. They may not even be able to control their emotions. Lose patience when the market fails to reflect predictions and frequently fails to adhere to important principles.
Therefore, the ideal time for traders to trade on a Demo account before switching to a real account is a maximum of 3 months. This period of time is enough to help traders fully meet the necessary requirements and accumulate important experience, while also creating the necessary preparation before switching to trading on a real account.
Using an MT4 demo account neglects to trade
On virtual accounts, because there is no financial risk, many traders often ignore the importance of trading and do not pay enough attention. However, this is probably a big mistake. Skills and habits formed on a Demo account can become habits when transferred to trading on a real account. Therefore, even if it is a virtual account, following trading principles is important to build positive habits when transferring to a real account.
Open the MT4 demo account incorrectly
A common misconception that many traders have is that they view virtual accounts as just being familiar with the trading software, without considering the other benefits. They may choose a large account type to trade, without considering choosing an equivalent virtual account to experience. This is a mistake, because the trading conditions between a virtual account and a real account of the same type are similar, bringing certain benefits when switching to trading on a real account. Choosing a virtual account type different from a real account can lose the authenticity and simulation of the learning process.
Start using Live with a large amount of capital
Many traders, when trading on Demo accounts, often achieve high winning rates. This can lead to a misunderstanding when switching to a Live account, as they start with large capital and face unforeseen failure. It should be noted that the trading conditions between these two types of accounts are not the same, so it is important to double-check everything when transferring to a real account and it is advisable to start with a small capital.
Epilogue
The above article has analyzed in detail the concept of the MT4 demo account, its strengths, weaknesses as well as some common mistakes made by traders when trading on Demo accounts. Hopefully, this article will bring useful knowledge to new traders, helping them improve their chances of success when switching from trading on a Demo account to a Live account. Follow Learn Forex Trading to update more information and knowledge about the Forex, Stock, and Cryptocurrency markets!
FAQ
Is the accuracy of the MT4 demo account high?
Demo Account is an issue that is not always accurate. Although forex brokers offer demo accounts for users to practice and test strategies, they can only simulate some typical situations, and cannot guarantee to prepare you for every real situation. Therefore, trading on a demo account cannot be considered a complete simulation of real situations.
How to create a Forex demo MT4 account on an iPhone?
To open a Forex MT4 demo account on an iPhone, you can follow the same steps as opening a demo account on a computer. However, instead of selecting the desktop version, you can select the iOS version and it will automatically be taken to the App Store. Or you can go directly to the App Store, search for MetaTrader 4, and download it.
Can a demo account withdraw profits?
It is not possible to withdraw profits from a Forex demo account. The balance in the demo account is only virtual money, and the purpose of trading on a demo account is to learn and practice, not to make profits. However, there is another way to learn demo trading and possibly receive profits, which is to participate in the “no-deposit bonus” programs of exchanges (eg Errante) to receive a bonus when opening an account. first-time account. However, you need to read the terms carefully to ensure you are eligible to withdraw the bonus when trading profitably.
