Trading on the Forex market is popular, and recently there have been forex brokers, and anyone can open a demo account without registering online. The volatility of the global economy only fuels interest in various trading instruments. However, getting started in such a large market with several trillion dollar daily turnover can be challenging for a novice trader. One of the main problems is choosing a good broker. Dealers offer different conditions even for the same currency pairs. There are many other nuances on which the success of both a beginner and a professional depends. Having studied the market, I noticed that some brokers offer their new clients to open so-called demo accounts. I decided to find out what Forex brokers with a demo account are, what are the features of a demo account, what are its advantages and disadvantages (if any). Everything that I managed to find out, I decided to share with my readers in this article.
What is a demo account of a forex broker?
Each participant in the stock or foreign exchange market must have their own account (or several). As a rule, we deal with real accounts in real currencies. But, there are so-called demo accounts, the currencies of which are virtual. They have the same features as the usual ones, but are designed for specific tasks: the learning process, training and improvement of skills, testing the performance of certain trading strategies.
Many forex brokers with a demo account allow you to open a special account in a professional trading terminal, which provides access to all key tools, analysis tools and other functionalities. Many people are skeptical about demo accounts, neglect them without ever knowing the benefits. Therefore, before giving up this opportunity, I recommend at least reading this article to the end.
A demo account is a simulator of a regular account, which provides all the tools a trader needs. The only difference is that instead of real currencies, the trader is provided with virtual money. Hence, the main drawback of a demo account follows: since money is not spent, and the real profit does not grow, the psychology of trading changes (risk factors are excluded). Demo accounts have other drawbacks, but I will talk about them a little later. On the other hand, by registering a virtual account, a trader will learn about all the features of the broker's trading processes, identify possible shortcomings and problems, assess the quality of the tools provided, and the convenience of working with them. So, virtual accounts make it possible to choose the best broker by checking many options on your own.
Forex brokers with a demo account - key benefits
Before opening a demo account, you need to choose a broker, a trading direction, and the required instruments. Even if a trader has the opportunity to immediately start trading for real money, one should not neglect the opportunity to open a demo account, as it has several advantages:
- Checking the direction of trade - is it worth registering a real account on the broker's website to start real trading?
- Study of the functional features of a specific broker's platform;
- Experience of real trading in the Forex market without the risk of losing funds;
- Checking the performance of new and known strategies, choosing the best option;
- Checking the appropriateness of choosing a particular financial instrument;
- Studying the features of market analysis at its own pace, not dictated by the market and the risk of large financial losses;
- Experience working with stock, derivatives and foreign exchange markets using various trading platforms;
Another important advantage provided by forex brokers with a demo account is the ability to learn how to “smooth out” emotions associated with both large losses and large profits.
Demo accounts have some downsides to be aware of:
- Large leverage provided to the trader. As a result, there is a feeling that you have unlimited funds and, accordingly, are less exposed to the risks of losses.
- The psychological aspect. Although all provided instruments are real, the use of virtual funds is not conducive to preparing for real trading. As a result, a trader experiences the full range of emotions after opening a real account.
- Loss of fear of losses and perception of real trading as a game. All this can lead to serious financial losses.
There is also another drawback, which is not common for all brokers that allow you to open a demo account. Traders may observe differences due to market fluctuations, economic news, deteriorating political situation and other factors.
Forex brokers - demo account without registration online right on the site
Experienced traders open demo accounts to test the functionality of new trading platforms, newbies - to get a general understanding of trading processes. The former use demo accounts mainly at the training stage, the latter periodically, to test certain trading strategies. There are two ways to open a demo account: with and without registration.
Registration of a virtual account
Any broker strives to expand its user base. Therefore, most often they offer to open a demo account, provided that the new user is registered and in the future will use the real services of a broker. Therefore, in order to open a demo account, you need to: select a broker company and go to its website, open the registration form and fill in its fields, confirm the entered data, log in to the site (enter your personal account), download a trading terminal for work and then open a demo account according to the broker's instructions. The latter can delete the demo account if the trader has not used it for a long time.
Demo account without registration
The option without registration is convenient as it does not require any additional actions from the trader. But, more often than not, brokers offer virtual simulators in the form of online services available directly on the brokerage company's website. Excessive "virtualization" causes the risks of divergence between virtual and real trading in various aspects.
The second (preferred) option is to open an account to work with the MetaTrader 4 platform. The broker allows you to download the terminal from its website without registering and provides a virtual account for working with it. Most often, you need to follow a few simple steps to open a demo account:
- Launch the MetaTrader 4 terminal application;
- Find "File / Open Account" in the program menu;
- Carry out further actions according to the prompts of the program.
As a result, the trader will be provided with a virtual account with the necessary data for access and tools to perform trading operations.
Key differences between virtual and demo accounts
Test trading platforms imitate the functionality and the list of available tools of real terminals, but, in fact, are only simulators of real trading. First, there is no interaction with the real market. Secondly, a trader cannot track the reaction of real people. Thirdly, many nuances (price slippage, requotes, etc.) were not taken into account.
When registering (or receiving without registration) a virtual account, you should think about the amount of funds available for conducting trading operations. Both too large and small amounts have a negative psychological impact: a trader can become unnecessarily wasteful or extremely careful, which will negatively affect real trading. Beginners are advised to stay at about $ 1000-2000 in order to develop self-control, not lose vigilance and get real practical benefits from working with a virtual account.
When can I switch to a real account?
Forex brokers with demo accounts allow traders to get ready for real trading. Many people are interested in the answer to the question: "when can I switch to a real account?" Usually, a virtual account is changed to a real one in the following cases:
- The trader has fully studied all the functional features of the terminal and is ready to fully work with it.
- Using a demo account, we managed to achieve an optimal ratio in the number of positive and negative transactions.
- The trader learned the basics of sound budget management.
- All major trading strategies have been tested, as a result, the most optimal ones have been selected.
- The trader managed to learn to control his emotions regardless of the situation.
Try to work with virtual accounts of various forex brokers to choose the best option that suits all your requirements. Their main advantage (which, in my opinion, covers all the disadvantages) is the ability to feel like a real Forex trader without any financial risks.