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What is a demo account?

You don’t have to invest real money right away in order to get started on Forex - you can try out your strategies on a demo account. In this article, we will discuss what a demo account is and highlight the main reasons it’s so popular among novice traders.

What is a demo account?

What is a demo account?

As we already know, Forex demo accounts are used to study the peculiarities of trading and test new trading strategies without the risk of losing real money.

Usually, trading conditions on demo accounts copy the conditions of live accounts. The difference is that to open positions you use virtual funds, which you get using your personal account. Trades using virtual funds are not covered on the foreign exchange market, but they show how the market itself works.

Why do I need a demo account? Main advantages of demo accounts.

Demo accounts are created to give novice traders an opportunity to learn various aspects of trading. With the help of a demo account, you can learn how to work with the trading platform, open and set up trades, and manage existing positions. Experienced traders use the demo to test or customize a trading strategy using various analytical indicators.

A trader cannot get a real loss or earn a real profit on a demo account. Despite this, trading on a demo account should be treated like real trading and, in addition to basic knowledge, you should also learn how to analyze the market and use the available technical tools.

When trading with real funds, traders are often influenced by their emotions. Overconfidence or persistent doubts can prevent you from achieving your goals. Demo trading allows you to plan your workflow, develop a trading plan, which can minimize the influence of outside factors.

The main advantages of demo accounts:

  • it is impossible to lose money;

  • trading conditions on demo are the same as the conditions on live accounts;

  • it provides ample opportunities for testing various trading strategies.

Thus, a demo account provides an excellent opportunity to get acquainted with the operation of the Forex market and try out trading strategies without risking personal funds. We recommend that each new trader start their acquaintance with the world of forex trading on demo accounts.

Article last updated: 2022-10-28

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