What is Forex Demo Trading Account
Forex Demo Trading Account is a simple and free account where Forex Traders can register themselves for Demo Trading in minutes. The Forex Demo Trading Account is made with a Forex Broker that provides a Forex Trading Platform for trading Forex Currency Pairs. In a Demo Account virtual fake Cash is deposited by the Forex Broker to practice Forex Trading. Forex Demo Trading Accounts are an excellent source to apply and exercise the Forex Trading Strategies developed by Forex Traders.
How Forex Demo Trading Account Works
A Forex Demo Trading Account is a free trading account that is useful for beginners to practice Forex Trading on a trading platform provided by the Forex Broker. Virtual Cash or Fake Cash is available in the Demo Account that can be used for Trading. The amount of Virtual Cash can be easily increased or decreased by beginner Traders to practice different strategies.
Metatrader 4 (MT4) and Metatrader 5 (MT5) are the most widely used Forex Trading Platforms available with different Forex Brokers for Demo Trading. A Forex Trader is connected with the Forex Exchange through the MT4 or MT5 Trading Software. All Currency Pairs are listed on the Forex Exchange for Trading. Currencies are quoted in pairs on the Forex Exchange. When a Forex Trader buys a currency pair on the Forex Demo Account, the first currency of the pair is bought while the other one is sold. Likewise, when the Currency Pair is shorted, the first currency of the pair is sold and the other is bought.
The Forex Demo Trading Account acts like a real account and a Forex Trader can make different types of trades easily. The total value of the Demo Trading Account increases or decreases as per the performance of the Forex Trader. If the Forex Trader is making a profit the overall equity of the account increases and if the trading strategy fails, the equity of the account decreases.
How to open a Forex Demo Trading Account
Opening a Forex Demo Trading Account is a simple and easy process. A Forex Demo Trading Account can be opened in minutes to start Demo Trading. All Forex Brokers provide the facility to open Demo Trading Accounts Online.
Steps to Open Forex Demo Trading Account
Step 1 Registration
To open a Forex Demo Trading Account, a Forex Trader has to register on the official website of the broker. The registration process starts by submitting the email address, name, phone number, and country of residence of the Forex trader on the Forex Broker’s Official Website. A password is also required to be set at the time of registration.
Step 2 Verification
The email address is verified by the Broker through an automated email which is sent to the registered email address of the Forex Trader
Step 3 Login
After verification of the email address, Forex Broker can login to the account with the registered email address.
Step 4 Installation of Trading Platform
A Forex Trader is connected with the International Forex Exchange through the Brokers Trading Platform. For starting Forex Demo Trading, a trader has to download the trading platform from the Forex Brokers website. Generally, Metatrader 4 (MT4) and Metatrader 5 (MT5) are used and recommended for Forex Trading.
Step 5 Open the Forex Demo Trading Platform
After the installation of the Forex Trading Platform, now the Forex Trader can login with the registered email and password and is connected with the International Forex Trading Exchange. It is time to start and practice the Demo Trading of Forex Currencies.
Instruction to Open Demo Trading Account on OctaFx
Instruction to Open Demo Trading Account on IC Markets
What are the Advantages of Forex Demo Trading Account?
- Forex Demo Trading accounts are offered by nearly all Forex Brokers.
- Forex Demo Trading accounts are easily accessible online all over the world.
- There is no requirement to deposit real money to start Forex Demo Trading.
- A Forex Trader can apply and study the tools used for Forex Trading. The basic Features of the Forex Trading Platform are unlocked for Demo Trading.
- Forex Demo Trading Accounts are best for developing, practicing, and testing Forex Trading Strategies in real-time trading setups.
- When a Trader is trading on a Demo Account with fake cash, there is no psychological stress and pressure on the Forex Trader. The emotions can be controlled easily and a trader can develop the habit of controlling emotions from Demo Trading.
What are the Disadvantages of Forex Demo Trading Account?
- As real money is not at stake in Demo Trading, a trader can lose interest quickly.
- Psychological Pressure and Stress Levels are different in Demo Trading as compared to Real Forex Trading. Image a Footballer practicing plenty kicks in his backyard with a dummy goalkeeper vs plenty kicks in an international match with a world top class goalkeeper preventing you to post a goal with a crowd of thousands cheering in the ground.
- Working on Forex Demo Trading Account for a long time can cause a waste of time as the Trader would not be making any money in real.
- Quick and high profits can be made in Demo Trading due to less pressure and no real money involved. Expectations of the Forex Trader can rise to make quick and high profits in a short time which can lead to Greed when starting Real Forex Trading.
- Limited Features: A Forex Demo Trading Account has limited features and tools as compared to a Real Forex Trading Account. A Forex Trader would be unable to use the Forex Trading Platform to its full capacity if some features and tools are locked.
- Research Reports: In a Real Trading Account, the Forex Brokers share Research Reports and Forex Analysis with the account holders prepared by highly qualified experts. These Forex Research Reports and Analysis can be very useful for Forex Trading that are not available to the Forex Demo Trading Account Holders.