In today’s all-tech world, the world’s largest financial market is about as accessible as your social media messages or the news. Online platforms and brokers place the world’s market within your grasp, as such anyone can become a trader after one single tap.
Brokers who offer services like MT4 and MT5 from MetaQuotes also offer a free forex demo account, also known as demo practice accounts, as a way of letting you practice your trading skills in an environment that copycats actual trading conditions without carrying any real financial risk.
Some brokers even offer demo accounts free of charge, and traders can choose how much in virtual funds to add to their practice account.
Demo-trading on a practice account has many advantages, but can also have a few pitfalls when it comes to moving from practice to putting your hard-earned funds at risk to make real returns.
Let’s dive in and see why novice traders must take advantage of brokers offering them to test their platforms and practice free of charge demo accounts.
What is a Forex Demo Account and Why Should You Use One?
A forex demo account allows traders to mimic a live trading setting – without putting any real funds at risk. As such, it allows you to start free online trading almost instantly, so you can nurture your trading skills before risking real money.
All novice Forex traders start with a Forex demo as their initial account to get a feel of what trading the currency market is like as well as to get used to Forex and stock brokers, and platforms they are using. In essence, a demo account enables traders to practice their trading know-how along with quite a few more attractive benefits.
Contrary to most inexperienced beliefs, trading is not a child’s play. While trading offers boundless possibilities for profiting, there is a large amount of risk, and as brokers are usually warning, almost everywhere when it comes to leveraged products, losses may surpass your deposits. For that reason, novice traders must take advantage when brokers offer them to test their platforms and practice free of charger demo accounts.
Learn and Trade Risk-Free with a Demo Trading Account
Signing up for a Forex demo account is like having free Forex training – as such it enables novice traders to put their skills into practice, without risking any real deals, by trading with virtual cash instead. After all, the most successful people in any niche are those who have acquired new skills and practiced their craft diligently – and the same goes for Forex traders.
You can outgrow your demo trading experience with some of the best free Forex trading platforms available. These platforms will offer you free access to a large variety of video training series from top industry-leading experts accompanied by quizzes and written notes.
Determine the Lot Size You Can Trade
If you’ve learned how to determine the lot sizes, you can trade it means you’re halfway there. The lot size is also essential, especially for beginner traders. Your lot is the minimum quantity of an asset that may be traded in a single order, which means that the bigger your lot is, the greater the risk exposure.
The lot system can also be used to standardize price quotes, allowing every investor to determine precisely how many units he is buying with each contract and assess what the price per unit is.
Another advantage of significant importance a novice trader should test is how helpful and responsive the support is. As in every other industry, the support service is one of the most important departments and will assist traders with technical issues, lost passwords, problems with withdrawing or depositing money. And since the market tends to be decentralized and goes around the clock excluding the weekends, it’s important that your Forex broker provides support in accordance.
What’s more, brokers can also offer you the possibility to start a chat and ask questions within the demo platform, while most of the reputable traders will maintain call centres, where operators can assist you if, for instance, your internet connection goes down while in a trading session.
Keep it Close to Real.
And last but foremost, when trading with a practice account, a novice Forex trader should always try to act like it is a genuine account so that the transition to real money goes smoothly later. Experienced traders recommend keeping the risks at a level you think you can handle as if your hard-earned cash was at risk.
You should also start your first demo account with relatively the same amount of funds you would deposit in the real account. Some practice platforms allow you to operate with almost $1000.000, which can reach orders of millions of currency units when you add leverage. If a novice trader gets used to such a great amount on a practice account, this could lead to unnecessary risk-taking when scaled down to a $5.000 or $10.000 live account, because he would have lost his sense of proportion.
To Wrap Things Up
Whether you’re just exploring brokers, learning the ropes of forex trading, or trying to develop to improve a new strategy you’ve recently acquired, forex practice trading can be a valuable way of providing a safe trading environment for you to learn and have fun while gearing up for the real objective of turning that energy and time into precious capital.
Clearly, you should be aware of common pitfalls, like creating unrealistic expectations or developing a trigger-happy trading finger, but overall practice trading is one of the most useful tools in the arsenal of an experienced and novice trader alike. However, no matter the results your new strategy yields, you must always bear in mind that trading with a practice/ demo account is much different than trading real capital. Nevertheless, skilled traders agree that if you can’t be successful with practice money, you will certainly not make it on the real scene.