The Benefits Of Using A Forex Demo Account
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This article will provide you with all of the benefits of using a demo account in Forex trading. You'll learn about what a Forex demo trading account is, why you should consider downloading a trial demo account, how to download a demo trading account, how to set up a demo account, the best way to use a demo trading account, and more!
Why New Traders Should Trial a Forex Demo Account, and How to Get Started
Did you know that global trading volumes in the foreign exchange market reached a record high in 2018? Thanks to volatility in global economics, more and more people are actively trading in the Forex market. However, trading a market which turns over more than $5 trillion every single day can be quite daunting at first. This is why your first Forex account should be a Forex demo account when you are starting out.
Within minutes, the account can effectively become your Forex practice account and can work as a free trading simulator. This could prove to be invaluable when you are first learning how to Forex trade. You can easily open up a free Forex trading demo account and be trading in a matter of minutes, and trading the global currency market risk free. Read on for more information about what exactly a Forex demo account is, the benefits of using one, and the best way for you to start using it today.
What is a Forex Demo Account?
As you may have gathered, a Forex demo account enables a trader to simulate a live trading environment - without putting any real money at risk. It enables a trader to start free online trading relatively quickly, so that they can practice trading before risking real money.
All Forex traders should use a Forex demo as their first Forex account to get a feel of what trading the currency market is like, as well as to get used to the broker and the trading platform they are using. Essentially, it enables traders to practice their trading skills along with quite a few more enticing benefits.
What are the Benefits of a Forex Demo Account?
If you speak to any seasoned trader, their list of demo trading account benefits would be endless for traders who are first starting out. Here is a list of just a few of the benefits you may want to know about:
Learn how to Forex trade risk free with a demo trading account
Owning a Forex practice account is like having free Forex training. That's because it enables the trader to put their training into practice, without risking any real money, by trading with virtual funds instead. After all, the most successful people in any field are those who have learnt and practiced their craft considerably - and the same goes for Forex traders.
You can complement your demo trading experience with some of the best free Forex training available, with courses such as the Forex 101 - Admiral Markets' Forex and CFD Trading Course. Forex 101 provides you with free access to a video training series from two industry leading experts, accompanied with written notes and quizzes. You will also receive a certificate acknowledging your newfound expertise!
Familiarise yourself with your trading platform
Most Forex brokers offer the well known MetaTrader platform. By opening a Forex demo account, you can familiarise yourself with the trading platform by making trades without putting real money at risk. This way you get to learn about how to take a trade, how to close a trade, and how to use different tools to your advantage, like different order types and trading indicators.
Admiral Markets offers the following trading platforms:
- MetaTrader Supreme Edition (A custom plugin for MetaTrader 4 and MetaTrader 5, created by Admiral Markets and professional trading experts)
When advancing to live trading with real money, it is essential you feel comfortable opening, amending, and closing trades when you need to. The last thing you want is to experience panic from not knowing how to get out of a trade. Instead, you may want to know how to use stop loss and take profit orders, so that the broker and trading platform can manage your trades when you're not there. A Forex practice account could be the solution to your long-term success.
Learn to manage your emotions
When it comes to risking money to make money, a lot of emotions can come into play. Euphoria and overconfidence can kick in after a few winning trades. Frustration and doubt can kick in after a few losing trades. These emotions can often cloud the trader's judgement on their next trading opportunity.
Trading on a Forex simulator helps you to identify these emotions so you can build a routine and plan around dealing with them. Most beginner traders don't know what kind of emotions they will face when winning and losing, so it's probably best to find out without risking any real money.
Create, develop and test your trading strategies
If you're learning with Admiral Markets, after graduating from the free Forex 101 course you can use a Forex demo account to practice the tools and trading strategies you have learnt. However, you may also benefit by learning more about trading through the Admiral Markets Education page, or by using some of the free indicators available on the MetaTrader trading platform.
The Forex trading simulator is by far the best place to test anything new you have learned about concerning indicators or strategies. You may also start to recognise your own trading patterns after some time has passed, and you may even start to develop your very own trading system. Having the ability to trade risk free often enables traders to be more creative in terms of testing and finding out what works best for them.
Find the best trading routine that suits you
The Forex market traders trade 24 hours a day, 5 days a week. So when is the best time to trade? Most traders prefer to trade around the opening of the Tokyo, London, and New York trading sessions which are: 12am, 8am, and 2.30pm GMT respectively. However, the best time to trade is when you have the ability to completely focus on the markets.
One of the great things about the Forex market is that you can develop a routine to trade the market that fits around your work and family life. However, when you first start out, it may be a challenge finding the exact routine that works for you. The last thing you want is for this to lead to poor trading decisions, which lead to losses with real money. Using a Forex trading demo account can help you to find the best routine that suits you, before you start risking real money. Remember: Trading is a marathon, not a sprint!
The Best Way to Use a Forex Demo Account
While the benefits of using a Forex demo account speak for themselves, there are some negatives you need to be aware of. Only after understanding these can you start to use your Forex demo account the best way.
Create a trading plan for a real money account and trade it on a demo account
The first step should be to create a trading plan that you would use on a real money account. While you may be experimenting on a demo account to find what works best for you, every trader needs a foundation to build upon.
Your plan may consist of the following:
- When will you trade? Try to stick to the same time every day, as you'll get to learn more about how that specific session moves.
- Which markets will you trade? Focusing on a few markets first may be the best way to implement your learnings through your Forex training. Some of the most popular FX currency pairs include the EURUSD pair and the USDJPY pair.
- Which strategies will you trade? After graduating from your Forex 101 course, decide which tools you will use to make trading decisions, and develop a strategy around them. This way you know what conditions you need to take into account when placing a trade and closing a trade.
- Which risk management tools will you use? Risk management is an essential part of trading successfully in the long term. Decide ahead of time how you will position each trade in terms of size, and how you will decide to close a trade in profit or loss.
The most important element here is to try and replicate how you will, or want to, be trading on a real money account. You can then practice this plan and amend it - until you are comfortable enough to move onto real money.
Create a trading journal to track your practice trading results
It's great to have access to a free trading simulator, but at what point should you move onto trading with real money? Only you can answer that, but you may want to consider tracking your demo trading results, and set yourself some goals to then take the next step.
Creating a journal of your historical trading activity can be quite useful, as you can see what your results could have been if you were trading with real money. Due to market volatility, they will never be exactly the same, but you can get an idea of whether or not your trading plan is working for you.
Of course, it only works if you're honest about your trading results. If you are, it can pay off in a big way. Some of the most successful traders in the world have mindset coaches, so it could also pay off to write a journal about your emotional progress in terms of how you feel after a winning or losing trade. It's a great way to prove to yourself that you have the mental fortitude to start risking your own money in live trading conditions.
Create a goal to transition to a live trading account
The day will come when you want to transition into a live trading account and try to reap the rewards of your hard work in live market conditions. However, when that day comes, it is down to you. So, the key question you have to ask yourself is what needs to happen first before you make that transition?
Some traders like to set goals. For example, it could be reaching 10% on your demo account money balance, or it could be simply reaching 20 trades, or it could be achieving three months of profitable trading first. One of the benefits of starting with a demo is that it can provide a seamless transition into a live account as your platform. The charts you use and your trading plan can all remain the same - and probably should!
How Do You Set Up a Demo Trading Account?
If you are eager to start trading in a risk free environment right away then it only takes a few clicks to open a demo trading account. After inputting your name and email you can begin to enjoy benefits such as:
- The ability to trade on any device (Windows, Mac, Android, iOS, etc)
- A fully immersed live market experience
- Free market data and real time news
- An expert quick-start guide
- 30 days access, or for a lifetime when opening a live trading account
With risk-free access, isn't it time you joined the world's growing trading community too?risks.