Before trading forex with real money on a live account, a beginner in Forex should start first on a demo account. With a demo account, you can trade the forex market without having to risk your money. Forex brokers offer a free demo account or you can trade on a demo account without joining a forex broker.
Trading platforms such as MetaTrader, cTrader, WebTrader, etc, provide forex traders with a demo account. Demo accounts for a beginner in forex, have many benefits. You can trade the foreign currency market by finding your forex trading strategy and be a profitable trader before moving to a real funded account.
A forex demo account will help you control emotions on forex trading and improve your psychology in general. Even that demo trading is different than live trading, with demo trading you can prepare yourself before trading with real money.
What is a Demo Account?
A demo account allows the trader to practice trading with a “free funded account”, so the trader doesn’t need to fund the account with real money. By trading on a demo account, you learn how to use forex trading platforms such as MetaTrader 4, MetaTrader 5, cTrader, etc.
It will help you understand the platforms of trading, how to set a stop loss, take profit, pending orders, etc. You can use the demo account to practice trading by analyzing the foreign exchange market with technical analysis tools. A demo account known as practice account can be used on a mobile app too, you can use the trading platform on iOS and Android devices.
By using a demo account, you can trade the financial market on real-time quotes Demo account trading allows you to simulate different strategies before you start trading forex with real money. On a demo account, the trader can trade any currency pair with a small and large balance on the trading account.
The demo account can be opened on the forex broker’s website. Or you can download trading platforms as MetaTrader, cTrader, etc, and create a demo account for free.
Develop your trading strategy
By trading on a demo account, besides the trading without real money, you have other benefits. As a new trader in forex, before moving to a real account, first, you need to have trading strategies that are profitable. Many traders don’t spend enough time to find a profitable forex trading strategy before trading with real money.
You should trade the financial instruments on a demo account to find a profitable forex trading strategy. With a demo account, you can stimulate different trading strategies which can help you improve trading on a real account. With a demo account, you can learn how to react to losing trades or analyze your strategies.
Keeping track of your trades on a demo account will help you by analyzing your past trades. You can analyze the past performance or do backtesting.
Demo trading account, it can help you determine which of the trading style suits you as a trader. You can also practice scalp or swing trading. As a new trader, you can learn to control your risk management, lot sizes. The forex market can be surprising sometimes and you can learn to react to these situations and improve your trading skills.
It will improve your psychology
Controlling emotions is one of the most important and challenging rules in forex. To be a successful trader, you need to have the proper mindset that doesn’t allow you to break rules of trading. But trading forex can be challenging, especially on a live account as it can be much harder to control your emotions in trading.
But you can improve your psychology by using a demo trading account. By doing this, you can use your rules in demo trading to improve your performance. Emotions on a live account vs demo account can have a difference when you trade. But you can learn how to react to losing streaks on a demo account and overcome that.
The demo account will help you improve emotions during the losing and winning trades. As a trader, when you win trades, then emotions may start to become more active. This may lead to emotions “start” trading for you. This is called “greed”, as you tend to make money when you’re trading.
By practicing on a demo trading account, you can learn how to overcome greed and improve trading psychology in general.
How long you should trade on a demo account?
Trading on a demo requires a profitable strategy before trading with real money on a live account. Just because you have found a profitable strategy it doesn’t mean you need to trade straight with real money. You’ll have to learn to manage your emotions in trading, react to the financial market’s behavior, and other factors.
The recommended amount a trader should practice depends on the demo’s success. A trader should trade at least a month and it can go up to 1 year with demo trading. As you spent more time in demo trading you think, you’re missing opportunities to make money in the forex. But by spending more time, you will be able to study the forex in more depth and take advantage of that before trading with real money.