Forex Demo Accounts

Forex Demo Accounts

What a Trader Can Do With a Forex Demo Account

Forex DemoA forex demo account is an account that is loaded with virtual money by the broker for the trader to use in simulated trading.

The essence of providing a forex demo account to traders is for them to do a whole lot of things that will enhance their trading experience and improve their ability to trade profitably in the forex market. Sadly, many traders under-utilize their forex demo accounts. In this article, we will look at a few things that traders should be doing with their forex demo accounts in order to derive all benefits accruable from them.

Top Forex Broker Brokers that offer Demo Accounts:

Broker Info Bonus US Traders Open Account
eToro Spread: from 2 pips
Leverage: 30:1
Minimum Deposit: $200
Demo Account: Open
Visit BrokerRead Review
AvaTrade Spread: 3 Pips
Leverage: 400:1
Minimum Deposit: $100
Demo Account: Open
%100 Welcome Bonus Visit BrokerRead Review
CMSTrader Spread: 1 pip
Leverage: 1:400
Minimum Deposit: $250
Demo Account: Open
Visit BrokerRead Review
London Capital Group Spread: 1 pip
Leverage: 500:1
Minimum Deposit: $250
Demo Account: Open
N/A Visit BrokerRead Review
Trader's Way Spread:
Leverage:
Minimum Deposit: $100
Demo Account: No
USA AllowedVisit BrokerRead Review

So what exactly should traders be doing with a forex demo account?

a)    Understanding the Trading Platform

If you conduct a poll of traders to find out how many traders actually use their forex demo accounts to understand their trading platforms, you will be shocked at the results. Traders hardly use their forex demo accounts to understand the trading platforms they will use to trade their hard-earned money. The forex demo account is a good way to understand how the trading platform works. There is a lot that can be learned. For instance, the trader can learn how to place orders. With the forex demo account, the trader can learn when to use an instant order and when to use a pending order. This point is so important. Many bad trades have resulted from the use of the wrong kind of order for a particular trade situation.

For instance, a comparison of the Jforex platform with that of ActTrader, the MetaTrader4, Currenex and other platform types will reveal that the process of setting pending orders is very different as you move from one platform to the other. The MT4 has a very simple system of setting pending and instant orders. A trader who has been used to setting pending orders with the MT4 platform may be in for a rude shock on being confronted with a JForex platform. This is why it is necessary to use the forex demo account to make all the mistakes that could be made in this regard so that when live trading is done, real money is not lost.

There are other stuff that could be learnt when it comes to understanding the trading platform. Things like using the indicators, the charting tools, opening and closing windows within the platform, conducting line studies, etc, all make up the mix when it comes to understanding the trading platform.

b)    Testing Expert Advisors and Indicators

The best way to test any expert advisors and indicators that have been created for live trading is to subject them to demo trading with a forex demo account. There is very little that can be done to improve an expert advisor or indicator if it is not put to the test on a forex demo account. Errors in coding can be revealed, corrected and the software put to the test once more in order to come out with a perfect product.

c)     Generating Trade History for Signals Alert Services

If you are a trader looking for a way to monetize your knowledge of forex trading by selling trade alerts or forex trading signals, then you will find a forex demo account to be an invaluable tool. No subscriber will commit his hard earned money to a signals provider without a track record. The forex demo account can help you generate that track record. By dutifully storing a history of trading activity on demo specifically for this purpose, the trader would have generated a powerful marketing tool that can in an instant of visualization, convince any prospect of the viability of the signals used to produce such trades.  Usually, the forex demo account has to be synchronized to a third party service such as Myfxbook to provide a source of verification of all results obtained.

d)    Source of Technical and Fundamental Analysis

Some forex demo accounts are sources of technical and fundamental analyses as provided by the brokers. There are brokers that can provide this information through their news bar that will serve as a wonderful source of information that can be turned into profitable trades by the discerning trader. Traders need to take advantage of these tools where they exist.

You can see clearly that forex demo accounts have a lot of important uses apart from simply providing virtual money for intending traders to toy around with. They should be used in the ways described above for maximum benefits.

e) Trading in Other Markets

You can also use the forex demo account in trading other markets such as the binary options or spread bet markets. Here, the forex demo account will serve as a source of charts and various charting tools used for technical analysis. It will also serve as a testing ground for strategies used in these markets. For instance, the binary options platforms provide charts which are too rudimentary to be used in any meaningful analysis. They simply show the progress of trades, usually drawn with a line chart. A typical forex demo account will come with a fully interactive chart, complete with candlesticks and various charting tools which can be used for current as well as historical studies.

You can also use your demo account to compare pricing for an asset with what is obtainable on the platforms of other markets. This way, you can actually get the best pricing for any orders you want to place.

f) Software deployment

These days, forex demo accounts are now being used as the basis for constructing software for other markets. It is no longer strange to hear of MT4 bridges, which are ways in which a demo account based on the MT4 platform can be used to create an automated trading software, which is then linked to the destination platform for trade executions. These types of software are increasingly being developed and deployed for use in the binary options market. Constructing and testing of these software does not start with a real account: all tests and debugging are done initially on a demo account before being tested on a real account.

You can see clearly that forex demo accounts have a lot of important uses apart from simply providing virtual money for intending traders to toy around with. There is so much that can be done these days with a demo account. Demo accounts should therefore be used in the ways described above for maximum benefits.

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