Forex demo account is one of the best learning, practicing, educational, informational and even entertaining tools that every Forex newbie can use for his advantage. Sometimes, beginning currency traders underestimate the usefulness (and I would say, the necessity) of the demo account trading. Demo account can be opened with almost any Forex broker and in 99.9% of cases it’s completely free. On the demo account one can trade Forex with the virtual money, doing exactly the same things that he’d do on the real account but without risking any real money. The advantages of the Forex demo accounts are tremendous:
- It’s free — you don’t have to deposit anything or pay any fees to open the demon account with the vast majority of the Forex brokers. And in the case when you don’t know whether the Forex trading is a right thing for you at all, “free” is the synonymous for ”great”!
- Practice trading — with your free Forex demo account you can practice your trading skills, develop new strategies and learn new things about currency trading. That’s possible because all currency pairs behave equally on demo and real accounts. The only difference is the virtual vs. real money.
- Get to know the broker’s platform — with demo account you have the access to the Forex broker’s trading platform, which you can test before moving on to the real account. And this can be very useful, especially with the exotic trading platforms.
- Free charting tool — even if you don’t plan to trade with the specific Forex broker, you can always use its demo account to have a free access to their trading platform’s charting tools. That can be very useful when your real account is set at the broker with a not-so-good platform.
Those are the advantages of the Forex demo accounts. Of course, it’s necessary to say something about the caveats, but the biggest thing about the demo accounts is that they are free, so, we can always close our eyes on their disadvantages without any damage to our purses.
- Execution may differ — unfortunately, Forex brokers usually have an ideal execution (no slippage, no reqoutes and no market delays) for the demo accounts and a real execution (with some of the mentioned unpleasant things) fore the real money accounts. You should understand this when moving from demo to real.
- Some demo accounts expire — some Forex brokers make demo accounts expire after 30 days. Of course, you can always open a new demo account, but all your stats and positions will be lost. Just try to find a broker with non-expiration demo accounts.
- Emotions are different — the psychology of Forex trading is very complex. When you trade on demo account using the virtual money the loss won’t frustrate you much and the wins won’t get your heart beating like crazy. On the real Forex accounts emotions play a huge role. You should keep in mind that you’ll have to adapt your trading psychology from demo to real at one point.