Best Forex Demo Accounts in 2021
A forex demo account simulates live trading conditions and gives the trader an idea about how a specific broker’s trading platform works. This is the broker’s “business card” in a sense because it shows the conditions and markets offered.
The best Forex demo account in 2022 should give the trader access to everything the broker has to offer, with few (if any) differences from the live environment. But this is not always the case.
Our List of the Best Forex Demo Account
Here is our list of the best forex demo account:
What Is a Forex Demo Account?
As the name suggests, a forex demo account is an account that simulates the live trading environment. It allows the trader to see how it is out there in the trading world and to test the broker’s trading platform.
A forex demo account is linked to the live market but the traders’ orders are not transmitted to liquidity providers and routed to the market. Simply put, it’s a simulation that allows beginner traders to trade markets under near-real conditions but with virtual money rather than real money. The main downside is that “paper trading” in this way doesn’t expose you to emotions like fear and greed that arise when putting your own money on the line.
A forex demo account is more than merely a vehicle for testing the platform’s functionality or checking the conditions offered by the broker. It is an education tool offered for free by the brokerage house.
How Does a Forex Demo Account Work?
Before opening a live trading account, forex brokers suggest trying their demo accounts first. This way, the trader can gain much-needed confidence by making beginners’ mistakes in a safe environment.
It’s easy to create a demo account on most brokers’ websites by entering a few basic details, including your email address. You’ll get your login credentials (username and password) by return email.
Your demo account will be credited with an amount of virtual money that varies from broker to broker. Opening and closing trades with this virtual money allows you to see the effects of the broker’s spreads, commissions, and leverage.
Key Features To Look in a Forex Demo Account
A forex demo account is one of the best ways for a broker to present its offering. However, not all forex demo accounts are the same.
One of the key features to look for is how closely the demo environment reflects the live market conditions. A common issue is that a demo account might show a tight bid-ask spread during an important economic event when the live spread would be much wider.
Another thing to consider is how long the broker allows for you to test its demo account, which might be only a week or a month. Ideally, you’d be able to use the account in tandem with your live account, for example: to test new trading strategies.
Pros & Cons of Using a Forex Demo Account
Pros
Cons
How To Choose the Best Forex Demo Account for Me?
First, the best demo account must have unlimited availability. In other words, it should never expire, so you can always use it to test new trading strategies without risking real money.
Second, a demo account should mirror the live trading conditions exactly, but this is not easy to test before opening a live account. Open a live account at the same time if you can, and fund it, but don’t trade until you’ve checked the live prices (and their spreads) against the demo account prices and spreads.
How to Safely Use a Broker to Make Money Online Trading?
“ To trade safely, you should first ensure that the broker is regulated so that your money is safe from fraud. However, although regulation may protect you from your broker, it won’t protect you from yourself and your poor trading decisions. Be sure to apply risk management techniques (such as stop orders) and money management techniques (such as committing no more than 1% of available funds to each separate trade). ”- Mircea Vasiu
Conclusion
A forex demo account is something that every brokerage house should offer. It’s also something that every trader should test before committing capital to a live account. We’ve discussed some of the demo account features in this guide and we’ve suggested some of the best forex brokers for you to try.
Frequently Asked Questions
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No. Some brokers are regulated by regulators such as the UK’s Financial Conduct Authority (FCA) and some are registered offshore to avoid such regulation. Choosing a regulated broker affords you some protections such as negative account balance protection.
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It depends. Most brokers offer popular the MetaTrader 4 (MT4) and MT5 software, but some web-based platforms and apps also work well.
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Yes, they do. A typical Forex trading account offers commodities, indices, and other markets besides forex currency pairs.
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Yes. It can take only a few minutes to sign up for a demo account, but fully activating a live account can take longer because you typically have to provide some identity documentation.
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Not necessarily. You’ll learn how to avoid simple mistakes when submitting trade tickets, but you won’t feel the fear and greed that traders succumb to when trading with real money.
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A stop order is a pending order that you attach to an existing trade. It instructs the broker to close your position if the price starts to go against you; the aim being to exit at a small loss before it becomes a big loss.