What is a Forex Demo Account and Why Do You Need It?
A demo account is a special type of account available for free on the broker's online trading platform. The key difference between a demo account and a standard (“real”) account is that you trade with virtual money only. However, trading instruments, charts, signals, and quotes are equally at your disposal as if you are trading with real money using a real account.
That means that a demo account is a complete copy of a real account, and the same strategies are available as if you are trading on a standard account. There are no technical or program differences, so if you do not know that this is a demo account, it is impossible to distinguish it from a real one.
Demo accounts allow you to:
get acquainted with the interface and functionality of your broker’s trading platform;
gain valuable experience using real trading tools and mechanisms while practicing without the risk of losing real money;
learn and understand the basics of online Forex trading;
develop trading strategies and experience while not risking real money;
experiment with new ideas and methods without any risks.
Demo accounts are not only for beginners. Demo accounts were designed specifically for novice traders for sure, but experienced players often use them to safely try a new currency pair or an innovative trading strategy of your own or one that has become a recent trend.
Features of Forex demo accounts:
each trading terminal is unique in how to register and open a demo account, although the principles of how you use a demo account after it’s opened are fairly standard for all Forex brokers;
demo accounts have a limited lifespan (e.g., 30 days) on some terminals and cannot be used indefinitely;
all demo accounts allow you to deposit “virtual dollars” (say $1,000) and when the deposit amount is exhausted, the account is usually closed automatically;
traders can open a new demo account after one closes and this is automatically done for you by some brokers.
The key factor is there are no obligations or risks for traders when using a demo account. You can close it at any time or just stop trading and the account will close itself without any consequences to you. However, to open a demo account with a Forex broker, you still have to register on its official website and verify it on the broker’s platform.
Registration and verification take only a few minutes and many brokers offer “no deposit” bonuses, which means that just for registering on the platform you get a certain amount of money (about $5-50) for free on your real account and you can use it to trade. You can practice on a demo account and then switch to a real one and start real trading without making any investment of your hard-earned money. Feel free to make your first deposit if things are working out for you. This is the best option for starting a professional career as a Forex trader.