A demo account is a trading simulator where you can hone your trading skills with currency pairs, metals, indices, commodities, bonds, stocks, ETFs, or cryptocurrencies.
How does a demo account differ from a live one?
You’ve probably come across advertisements for trading courses. Maybe some of you have taken them or plan to do so. The first thing you’ll be introduced to is a demo account. It is on this platform that you will sharpen your skills. Like any good simulator, a demo account is as close to reality as possible. The value of assets, market fluctuations, the function of indicators – everything is authentic, except for the money.
On a demo account, you have access to a $10,000 virtual balance, allowing you to learn trading without jeopardizing your financial well-being. This is a definite advantage. The only downside is in response to the question, “How do I withdraw money from a forex demo account?” — you’ll hear one answer: “You can’t.” You’re trading with fake money, so your income is also fictitious. However, the knowledge gained through practice is very much real.
Karen Fu is an Asian forex trader. For over 4 years, she independently studied the art of trading, practicing on a demo account before engaging in live trading. She became one of the best and made it to the top 10 most effective scalpers.
Where is the best place to open a Forex demo account?
You already know that a demo account is a simulator. On one hand, you get acquainted with the platform and test strategies, on the other — you evaluate the service provided by the online broker.
When trading on a demo account, pay attention to the following points:
1. Trade execution speed provided by the online broker. This is especially important for those who have chosen scalping — a type of intraday trading that involves short-term trades with a target profit of a few points.
2. Customer service. How quickly and professionally does the customer support service answer your questions and help you resolve your issues?
3. Informational support. Does the online broker provide up-to-date analytics, and do they publish educational materials on their website?
4. Is there an option to switch from a demo account to a live one? Some brokers offer this option. So, if you’re wondering, “How can I earn on a forex demo account?” – here’s a hint.
How to open a demo account?
Opening a demo account is almost no different from opening a live one. On the online broker’s website, select the appropriate section and click the “DEMO” button.
Congratulations! You’ve opened a demo account.
How to trade on a demo account?
In short, the same as on a live one. As we mentioned earlier, a demo account is a simulator that immerses the user in real trading. Let’s discuss what you should focus on when learning on a demo account:
1. Get to know the trading platform and its capabilities: opening and closing trades, setting protective orders, using indicators, etc.
2. Try trading different assets and observe which ones you find more appealing and interesting.
3. Develop and test your strategies. Only through trial and error will you be able to create a unique strategy. It’s reassuring that it won’t cost you anything on a demo account.
4. Emotions. There’s no worse advisor for a trader than emotions. Excitement, bravado, panic, anxiety, elation, despondency, anger — the list goes on. Emotions should not dominate a trader. Remember, when trading with virtual money, you are more forgiving of losses. Since you’re not actually losing anything, you may take some trades without much thought, which won’t happen with a live account. Keep this in mind.
How to replenish a demo account?
You can’t fund your demo account with real money. However, you can contact customer support, and they will top up your virtual account with the desired amount.
How to close a demo account?
A demo account doesn’t require any financial input from the trader. It is provided for free. Why then might someone want to close it? For instance, you may have exhausted all virtual funds and would like to begin training on a new demo account. To do this, you’ll need to contact the customer support service of your online broker. If you’re interested in how to delete a demo account without opening a new one, also call the customer support service.
Try to approach trading on a demo account with utmost responsibility. It’s not a game, but a practice session before the big race.
