All that you always want to know about Forex trading and how to get started with a demo forex account before mastering the art and science of trading
A forex demo account is a software tool usually offered by most trading brokers. It is a way in which you can use money (not real of course, but fake) for training and practising trades on a real trading platform. It is an invaluable process in which would-be traders can learn to understand the terminology, the strategies and the various tools of trading foreign exchange before funding the account with real money.
Demo accounts are useful tools for traders looking to learn how to operate the foreign exchange market as well as for experienced traders looking to experiment with alternative trading strategies or who want to trade different commodities.
Even experienced stock market traders who might want to try the forex will encounter different influencing triggers and subtle changes in market conditions that they might not have encountered elsewhere.
For the majority of users though, a demo account is a vital tool for first time traders or those that would like to trade, or have an interest in doing so but don’t have the available funding. It is real environment to test out their trades under actual market conditions in a risk-free way.
Demo account features
There are a number of useful features and tools that a trader can utilise with a demo account. For instance, XTB has a number of tools that are vital to understanding the way in which trades are made and the information needed to master them.
Free trading: Traders can explore, risk free, through virtual funding and buy, sell and put into play various trading strategies. In fact everything about a demo account is the same as the real thing, except you aren’t using real money.
Price indicators: By setting up stock indicators traders can set alerts for buying and selling their positions.
Desktop or mobile: Most demo accounts can be opened on either a desktop, laptop or mobile device in much the same way, making it a very flexible platform.
Access to markets: It isn’t just the forex market that can be access through a demo account, over 1500 other markets are also available for traders to experiment and practise within.
Customer support: One of the key benefits of using a demo account is being able to access customer support for any problems encountered. When something goes wrong, or a trader fails to understand what to do while using the software, it can be reassuring to have someone to talk you through the trading language and process.
Mastering the skills of trading
Most successful forex traders will open up a demo trading account at some point. Whether it’s to experiment with new strategies or to just to practise their trading skills before graduating to real money. A demo account is something that just cannot be replicated on paper or in the classroom.
Using real time market analysis is the best way to learn how to trade. At each stage of your development, seeing decisions and strategies being applied in real time is essential for a deeper understanding of the market.
Another benefit of using a demo account is getting to know the forex broker you are going to use. Not only does the demo account offer an insight in to how the forex software is likely to operate, it also allows the trader to build a relationship with it, before risking real money.
Demo accounts as teaching aids
It isn’t surprising to
learn that demo accounts are widely used by schools as a teaching aid for
students in both economics and finance classes as a way of effectively
monitoring trades, strategies and market forces.
Already present and an active participant in this way within many university faculties is the Bloomberg Finance Lab, offering access to market analysis in much the same way as forex demo accounts do. Nearly all the basic concepts and rules of economics can be found in the process of setting up, monitoring and settling a stock or forex position through a demo account.
The demand for demo accounts grows
Demo accounts haven’t always been available. Since the widespread adoption of the internet and faster connection speeds, it has enabled almost anyone to access the forex markets, in much the same way as the professional traders do.
There are precious few instances when pressing the wrong button, and making a mistake in deciding a trade can actually be a good thing. When you use a demo account, this is one time when you can see the error and its full consequences, without it costing you a dime. It is a more common occurrence than you might think. Demo accounts are one of the most useful tools a trader can learn with and it usually pays to take full advantage of one.