Our favourite Forex demo account.
Having access to a Forex demo account is a great way to learn how to execute your trades into the global currency market without risking any of your hard-earned money. Having a Forex demo account is also helpful when testing or learning a new strategy. Following are some great tips on using your Forex demo account.
Downloading a Forex demo account.
Virtually every Forex broker offers a Forex demo account for you to use. Here is a link that you can use to set up a Forex demo account within the next 5 minutes if you don’t already have one. I suggest before you install a Forex demo account you read the following tips.
What should you learn first when using a Forex demo account?
Spend a few minutes on the broker’s website and find their learning videos on how to use their Forex demo account. The first thing that you will likely want to learn is how to place buy and sell orders, however, it is my strong recommendation that you first learn how to place a stop loss order. When you place any Forex trade, whether you are entering the trade on a Forex demo account or a real live account, placing your stop loss at the same time as you enter a trade is extremely important. The first step in learning how to use a Forex demo account should be to ensure you know how to place a stop loss when you click the buy button.
There are a number of different types of orders you can place when using a Forex demo account such as market orders (entering right now at the current market price) and pending orders (nominating a price you wish to enter) and you should familiarise yourself with how each of the order execution strategies work. Along with knowing how to place a stop loss, one of the first things you should also learn is how to close a position at any time you wish. In the event price has not reached your profit target or stop loss and for whatever reason you wish to close the trade or part of the trade, you should know how to do this.
- Learn how to place a stop loss.
- Learn how to place market and pending orders.
- Learn how to close a position entirely or close part of the position.
All Forex brokers should have a free online learning resource that will teach you the basics of buying and selling into the Forex market and using a stop loss.
How long does a Forex demo account last?
A Forex demo account will generally last 30 days before it will expire however renewing your Forex demo account is relatively easy and if you are using a MetaTrader 4 Forex Demo account you can renew it simply by clicking on File, Opening Account and renew the Demo account. Or just call the broker and advise them you are not ready to open your live account yet and would like to continue in a demo mode.
Do I need to pay to use a Forex demo account?
Forex brokers offer 30-day free trials of their Forex demo platforms so you do not have to pay for a demo account.
How long should you trade using a Forex demo account?
This is a good question and I have a very direct answer. It is my strong recommendation that you use a Forex demo account until you are proficient, confident and comfortable with all the functions of how to place stop-loss orders and buy and sell functions. As soon as you are at this level move to a real money live trading account. Most novice traders spend far too much time trading a demo account thinking they are actually trading when in reality they are not. Trading a Forex demo account creates zero emotion and trading a live money account is the ONLY way to learn how to trade. Use a Forex demo account to learn how to buy and sell and place stop loss order, do not use a Forex demo account to try and learn to trade. Learning to trade comes from trading real money.
The benefits of a Forex demo account?
The benefits are that you can practice entering the market as a new trader with the various buy and sell options available to you and you can also practise and test entering and exiting a trading strategy you would like to trade on a live account. You may also like to download and use a number of different Forex demo accounts to compare spreads. This is the margin the broker will make on each of your trades and this should not alter from a demo account to a live account. Having a demo account is also useful for learning how to apply various indicators to your charts as well as testing any automation system you may have purchased over the internet. However, I will remind you that a Forex demo account will not teach you how to trade and there is no emotion created when you trade a Forex demo account which will be the biggest driver to whether or not you will make money.
The pitfalls of a Forex demo account.
There is really only one pitfall I believe traders fall into with Forex demo accounts and that is thinking they know how to trade if they are using one and are profitable. If you are trading a Forex demo account and it is showing a profit, in reality, you have made $0 and you are not a profitable forex trader. How you trade a Forex demo account and how you trade a live trading account with real money is highly likely going to be very different. Why? Because your emotions will dictate how you behave as a trader. With a live account there is real risk and with a demo account, there is no risk. No matter how insistent you are that you will trade the same way, the reality is you won’t. So, if there is a pitfall to using a Forex demo account it usually centres around traders thinking they are profitable when using them and using them for far too long. Profit only comes when you trade real money.
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