WHAT IS A FOREX DEMO ACCOUNT?

A forex demo account will enable you to trade the markets as a simulation without having to put any of your own capital at risk. It’s completely free and will allow you to use the broker and forex platforms before investing in them.

Watch this video: Learn to trade forex - free forex demo account (05mins 33secs)

THE BENEFITS OF A DEMO ACCOUNT

Any experienced trader will tell you to try a demo account first before diving into the market. Having a demo trading platform will allow you to be able to train yourself in trading by practising. As the saying goes practise makes perfect. At Platinum, we would always recommend using a demo whilst training with us on our trading program, this is to ensure you are not making mistakes with your hard-earned cash.

Familiarising yourself with a trading platform is key to being consistent, as having the platform be second nature for you to use will be necessary. You can practise with the different tools and orders before having to use them for real.

The Types of Platforms you can use:

Meta Trader 4

Meta Trader 5

Also, interactive brokers will allow you to trade on demos using their online-based platforms too.

DEALING WITH PSYCHOLOGY

The majority of beginner traders have no idea how large role emotions play when you are trading, and this is why many fail. Using a demo brings you back down to earth as you learn you won’t win every trade and you will make losses too. You will better be able to deal with losses once you’ve spent time honing your skills and emotions on a demo before trading live.

DEVELOPING STRATEGIES

The main reason people use demos is to develop different strategies in their trading portfolio, trying a new strategy on the live market is a big risk, if you make a mistake, real money is on the line. Being able to test them is key, and every trader should take note of this no matter how experienced they are.

FINDING A ROUTINE AROUND YOUR LIFESTYLE

Most retail traders have full-time jobs and finding time for trading can be tricky, this ties into testing strategies but is still important. Having a demo, to begin with will enable you to find the best routine of charting and trading around your full-time job. The forex market is a 24-hour market; therefore, you can test your skills out at all sorts of times of the day. Use a demo to find when works best for you.

THE BEST PRACTICE TO USE A FOREX DEMO ACCOUNT

The biggest thing with a demo account is to trade it just like you would trade a live account. This means having the exact same amount to start with as you would with a live account, this is key. You should set up the trading plan the exact same way with no alterations. You want all the variables to be the same so when it comes to living, it’s a smooth transition.

Focus on which currency pairs you will be trading, the risk at which you will be trading them, the times of the day you will trade and what strategies you will be using.

ENSURE YOU ARE KEEPING TRACK OF TRADES

Having a trading journal will enable you to understand what strategies are working and what type of risk management will provide you with the results you are looking for. As mentioned it should be traded the same way as a live account, therefore if you return 5% on a demo this will give you a realistic return on a live account.

Always be honest with your results as this will help you transition in live trading easier rather than having false expectations.

The Top 5 Rules for Trading an Forex Demo Account:

1) When you are trading on a forex demo account try and use it as if it is your actual live account

2) When you open you first forex demo account try and familiarize yourself with all the key features

3) If you are new to trading remember that all brokers will help you in any queries or questions you may need answering and you are able to Trade Forex, CFDs on Shares & Indices risk free.

4) Most Demo Accounts will start with around $10,000 of virtual money for practicing & refining your trading strategy. Do not overleverage your account.

5) Try Multiple forex demo accounts before you got live as you have to be comfortable with your trading platform. Ig Markets lets you test drive their award-winning platform and you can trade stocks and forex for free.

CONCLUSION

Having a demo trading platform is a no-brainer and every trader should have one as they start out in their journey, even as experienced traders we will use them when testing out new strategies. Trade the demo just like the live account and trust the process! Trading is a marathon, not a sprint!