Forex trading is a highly profitable venture. For this reason, there are numerous traders and hopefuls all over the world. With its high profitability, there are only a few highly successful traders and very many who wish to get in to the industry.
The entry point for many forex traders is the demo account. This is a free account that traders use to access the market and to practice how to trade.
Many forex brokers who facilitate access to the forex market can lead you toward opening demo accounts on a trading platform such as the Metatrader 4.
Features of a Forex Trading Demo Account
Free to use and access
Demo accounts are freely and easily accessed. Download the app or access the Metatrader 4 website and register for a free forex trading demo account. Like with any other online account, you will have to provide a username and access password that is only known to you to access the account.
When you have registered for the account, you can now use it for as long as possible all for free.
Has virtual money
Another feature of the demo account is that it has virtual money. With this money you can learn how to trade the market.
You can place trades, make profits and even losses while using the demo account to trade. However, you will not feel the losses or enjoy the profits as this is only virtual money.
Has real time access to the market
Demo accounts on MT4 allow you access to the forex market in real time. This means that as you trade on the demo account, you have the prevailing conditions of the market, you will learn how to navigate the market without having to risk any money at first.
Benefits of a Demo Account
Risk free trading
As alluded to before, using a demo account is suitable for both experienced traders and newbies. For experienced traders, they are able to assess a potential trade without risking their actual float. Newbie traders on the hand, can access the market without the risk of losing their initial trading capital.
Learn how to analyze trades on demo account
With a demo account, you can easily learn how to carry out technical analysis on the trades you want to carry out. Just like on a live account, you can create charts to get historical information on a particular currency pair, you would like to place a trade on.
Develop your forex trader strategies
As a forex trader, there are different strategies that you can apply to become a successful trader. It takes some time to get the best strategy that you can apply. Before you perfect your strategy, you are likely to face lots of financial losses. This is where the demo account comes in.
Use your demo account without the risk of loss to create and develop winning trading strategies. Once you start trading on a live account, you will know the steps to take to minimize your losses and increase your wins.
Access
Just like a live trading account, you can access a demo account on a computer or a mobile device. You can do so through the website or by downloading a mobile app onto your mobile device for trading on the go.
Not limited by live trading rules
On a demo account, your trades are not subject to rules such as end of day price movements, low funds rule or any other rules that touch on the amount of money that may limit your trading in a live trading account.
Conclusion
Demo accounts are important elements in forex trading. With them a new trader can learn how to trade and what to expect of the market when they have a live funded account. Experienced traders use their demo accounts to test out a trade prior to their making it. This helps them gauge how the market moves and helps them make a good trading decision.