There are many different Forex trading platforms out there that offer a forex demo account, each with their own characteristics, advantages and disadvantages. How is a trader supposed to know which system or broker will work best for him and which platform will best serve his trading needs? The simple answer is to try it out. Every reputable brokerage will offer you the opportunity to test their trading software. This is done by opening a demo trading account. You will be able to use demo dollars to see how the system works for you.
Demo Account Trading Advantages
One of the biggest advantages to forex demo accounts, is that in addition to trying out the trading platform you can also test your Forex trading strategies without risking your actual funds. With most brokers, you can continue using a demo trading account long after you decide which platform is best for you, and test as many trading strategies as you wish. It should be noted, however, that some brokers offer their demo trading accounts only for a limited time, so you should check the offering carefully.
Study the Trading Platform
The demo software allows you to familiarize yourself with all the characteristics of the platform you are testing and determine whether or not you are comfortable using it and whether or not it is intuitive to you personally. While it’s normal to take some time to learn a new platform, if you find yourself struggling too much, you may want to explore other options.
Selecting the Right Broker
A simple google search for Forex demo accounts will provide you with hundreds, maybe even thousands of choices of brokerages that offer this service. Clicking on anyone of them will likely take you to a page of their website that explains exactly how to open a demo account and how that demo account will work. It is important to note which features each demo account will allow you to use and which features are not available to demo users, as some brokers limit the services offered on their demo accounts. Specifically, some brokers might limit the amount of trades you are allowed to make or may block certain trading strategies or plugins. Some brokers also offer a limited selection of currency pairs on their demo account. Likewise, if you are looking to test strategies, your needs may be different than if you are looking to test out the platform and learn how to use it, so you should plan accordingly.
Reading the Small Letters
Finally, make sure that the brokerage you are looking into does not have hidden costs to using their demo version. Surprisingly, some brokers require a minimum deposit in order to use their demo account. We tend to think that the highest quality brokers are those offering a demo entirely for free.
Understanding the Differences Between a Demo Account and a Live Trading Account
Though a Forex demo account should be nearly identical to a live account, it’s critical to make sure that you understand the differences before switching to a live account. Though the differences may be subtle, they can impact your trading, so proceed with your eyes open, and you should have a smooth transition from a demo account to a live trading account. Here is a list of forex brokers to choose from and practise.