Benefits of using a Demo Account for Forex Trading

Forex trading may seem simple, anyone can trade currencies. It is essentially based on buying or selling a certain amount of currency against another. Actually, its not that simple.

There are choices and decisions made in between, such as spreads, prices, deposits, and leverage levels, all of which will shape the way you trade the forex market. Practising all these options and variables, while actively applying your knowledge, is the best way to prepare for live forex trading.

What is a Forex Demo Account？

The forex demo account is a free account with virtual money for traders to test the trading strategies, broker‘s platform, or learn how to trade. It is highly beneficial for forex beginners to test their skills and get to experience forex trading without the need to invest real money. Demo accounts are risk-free accounts with no fear of losing money since it doesn’t involve any actual money.

Benefits of using a forex demo account include:

• The demo account allows traders to get familiar with the technical features of the trading platform and to better understand how the forex market works

• Practice live trading with virtual capital 

• It is a safe place where a trader can evaluate and test the analytical skills and trading level before starting trading with a real account

• It offers traders the opportunity to explore the trading platform features and indicators 

• Demo trading can be very useful in testing several currency pairs and different financial instruments without the need to risk real money

• Easy access to live market charts, trading signals, forex news and more

• The opportunity to test forex trading strategies with no financial consequences

Most forex brokers offer free demo accounts for traders to explore the trading platform and get familiarized with the market. With zero risks, forex newbies can practice trading until they develop a forex trading plan. 

Learning is helpful, but Practicing is everything 

No matter how much knowledge and information you manage to know about the market, without practising this knowledge they are less valuable. Getting fully exposed to the market teaches you discipline, patience and enriches your trading experience. 

A demo account is not only for beginners. In fact, many professional traders prefer to test their new trading strategies on a demo account first before applying them to real trading.

Why Should Traders Use Forex Demo Accounts？ 

Using a forex demo account over a set time period enables traders to master market specifics.  Over time, an experienced trader will be able to choose entry and exit levels wisely, while getting more skilled in detecting how frequently market changes occur.

The more you practice on a demo account, the more versed youll become. 

Remember to take things slowly and gradually. Youll discover how active and dynamic the forex market is, which will in turn improve your trading experience.

1. Explore the Forex Market: 

A demo account is very functional when it comes to exploring how the forex market works. You can better understand how to trade currency pairs, what affects exchange rates, how to avoid volatility and manage risks effectively before committing to real trading. 

Also, it can be a good evaluation of how you are into currency trading. As we mentioned, it is not an easy process. Some may find the market attractive at first, but they may find it hard to keep up with the ever-changing nature of the market. The demo account will be very helpful in this aspect.  

2. Risk-Free Learning: 

Demo trading will be more impactful for novice traders as they will be able to learn with no risk while getting exposed to the real market environment. It will enable them to try things out, practice their forex strategies and evaluate their market knowledge before moving to actual trading. 

3. Test New Strategies: 

The demo account will always be a good place to test and evaluate how successful a strategy is before implementing it on real money. 

4. Trading Platform Trial: 

The trading platform is very crucial to all forex brokers, it is the trading portal where all trades are being executed. So, testing the trading platform makes a huge difference in choosing your broker. Using a forex demo account allows you to explore the trading platform closely before opening a real account. 

So, does that mean demo trading has no disadvantages？ Of course, demo trading has its own cons that include: 

1. Poor trading decisions dont have real consequences: 

Although demo trading can be a useful way to avoid trading mistakes, some people do not seem to learn their lessons quite as well if the real loss of money was not involved. This means a trader may keep repeating the same mistakes over and over without working on fixing them. 

2. Different emotional responses:

Successful trading generally involves learning to manage your emotional responses appropriately. Sometimes this key lesson can only be learned by profits or losses in real money since people may psychologically underestimate the virtual profits and losses in their demo account.

3. Real trading conditions may differ: 

Although demo accounts offer real-time trading, things can be different on a real account especially at times of big data or events. Demo trading may also involve less order slippage, re-quotes, and faster order execution than real transactions. 

Looking for the best broker to open a Demo Account？

AximTrade Demo accounts are available with virtual funds for trading practice and learning. The forex demo account can always be a good way to explore how fast and advanced AximTrades platform and services are before committing to a real live trading account. You can also check the promotions and contests for demo accounts to earn prizes and gifts.

AximTrade is a fast-growing brokerage service provider in the global markets with a highly advanced MT4 order execution and Copy Trade platform. One of the core values of AximTrade is to enable forex traders with easy-to-use technology, educational resources, technical analysis, varieties of forex bonus promotions, and a highly competitive trading environment with the best trading conditions.