Best Forex Demo Account in 2021

What Is a Forex Demo Account?

As the name suggests, a Forex demo account is an account that simulates the live trading environment. It gives the trader the opportunity to “see” how it is “out there” and to test the broker’s trading platform. 

More importantly, a Forex demo account is more than just testing the platform’s functionality or checking the conditions offered by the broker. A Forex demo account is an education tool offered for free by the brokerage house. 

A trader may spend his/her time by using virtual funds and trade markets just like in a real environment. Basically, the Forex demo account is linked to the market, only that the orders are not transmitted to liquidity providers and routed to the market. Simply put – it’s a simulation. 

How Does a Forex Demo Account Work?

Before opening a live trading account, brokers suggest testing a Forex demo account first. This way, the trader may gain the much-needed confidence before plunging into live trading. By simply filling a form with the personal details and an email address, the trader can download the trading platform and fill in the credentials received per email. 

Once logged in, the account is credited with a virtual amount that varies from broker to broker. The trader may use it to open and close positions, to see what the commissions would be if a similar trade would be taken in a live account, to check the broker’s spreads, the leverage, and so on. Every functionality of a live account appears in a Forex demo account, only that the latter uses virtual funds. 

Key Features To Look In a Forex Demo Account

A Forex demo account is a broker’s way to best-present its offering. However, not all Forex demo accounts are the same. 

One of the key features to look for in a Forex demo account is how closely it reflects the live-market conditions. For example, an issue with Forex demo accounts is that they show a tight spread during important economic events, like the Non-Farm Payrolls in the United States or when the main daily fixings are up, but a live account would have a wider spread. Therefore, the trader would be better off to compare the two and make sure that the demo account’s features are identical to the live one. 

Another thing to consider is the availability of a demo account. Some brokers limit the time to use a demo account from a couple of weeks to a month. Ideally, a trader wants an ongoing demo account even after opening a live one, for the simple reason that the trader may want to test some trading strategies on the demo account before testing them live. 

How To Choose the Best Forex Demo Account for Me?

First, the best Forex demo account must have unlimited availability. More precisely, the demo account should never expire – a trader should take as much time as needed to use it, test new strategies, and make the most of it. 

Second, a Forex demo account must reflect the live trading conditions 100%. Unfortunately, this is difficult to test before opening a live account, but easy to do so after. Therefore, the best way to solve this issue is to open a live account, fund it, but delay trading until comparing the conditions in the Forex demo account to the ones in the live account for a period, ideally a month or so.

Conclusion

A Forex demo account is something that every brokerage house should offer. Also, something that every trader should test before dedicating capital to a live account. The list provided in this article combines all the features that make it easier for the trader to pick the best Forex demo account in 2021.