Forex Demo Account – Should You Use One?
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Forex trading is one of the investment packages that require practical skills and a good trading strategy to remain profitable in the market.
To make trading easy for beginners, brokers usually provide a Demo account; structured the same way as the live account for learners to practice trading. Practicing with the Demo account prepares the trader on how to trade the live account. It also allows the beginner to develop excellent strategies for trading.
This work has therefore examined the importance of practicing with a Demo account before proceeding to use a live account. You will also find in this work the list of best forex brokers for beginners to create a Demo account for practice in case you want to create a demo account for practice.
What is a Forex Demo Account?
A forex demo account is a trading account structured after the real market to produce exact prices for buying and selling the different financial instruments traded at the forex market today. However, the money provided for trading on a Demo account is not real money and therefore not withdrawable too. Practicing with the Demo account equips the trader to trade the live account without fear and to avoid common mistakes too.
How to create a forex Demo Account?
There are two major ways for creating a Demo account such as: using the MT4 or through the broker’s website. We have discussed them below:
- Creating a Demo through the MT4: Creating a Demo account using the MT4 is often very easy, as it does not require much processes. All the beginner needs to do is to login into his MT4 and select the “Create a Demo account” option which appears on the “add broker” menu. Next, he needs to “search” for the broker’s name on the MT4 to register a Demo account with them. Once this is completed, his Demo account details will be sent to him via the details he supplied while registering.
- Creating a Demo account via the Broker’s website: The second method of creating a Demo account is to visit the selected broker’s website and select the option for “open a demo account” usually provided on the website. The trader will be required to submit his identification details and afterwards the login details of the Demo account will be sent to his email.
Advantages of using a forex Demo Account
Here are the some of the advantage of forex trading:
- Helps to avoid mistakes when trading on a live account.
- Helps the trader to develop good trading strategies.
- Provides insights towards understanding the market movement pattern.
- Useful in backtesting a robot before connecting it to a live account.
Disadvantages of using a Demo account
- Profits are not withdrawable
- Often lures traders to take big risks
- Not all pairs are listed for trading on the demo account.
List of brokers offering a Demo Account for trading
- IC Markets
- HFM (Hot Forex)
- Interactive Brokers
- Hantec Markets
Difference between a Demo Account and a live account
- There are no fees or commissions charged for using a Demo account. This is unlike the live account that requires some deposit before one can commence forex trading.
- The profits made on the live account are withdrawable but not possible to do so using the Demo account.
- Not all pairs provided for trading on the live account are usually listed by the broker on the Demo account.
Do traders have to pay to obtain a Demo Account?
Opening a demo account is free with all forex broker. Likewise, the MT4 service providers allow traders to practice freely using the MT4 on the trading platform.