27 July 2023
Real or demo account
If you've read a lot of materials about the Forex market, learned everything about pips, spreads, margins, leverage, brokers, and more, and have thoroughly studied trading strategies, don't rush to spend money. Before you risk real assets, open a demo account and use virtual funds.
Advantages of a demo account
A demo account is a demonstration account where trading is carried out with virtual money.
Many traders consider virtual accounts to be a waste of time, but most beginners start with them. This is an ideal tool for novices who want to get to grips with the trading terminal, review its functionality, and learn how to open and close orders. For experienced traders, this is a good opportunity to try out trading ideas and strategies, as it will not affect your wallet.
You get access to a real trading platform, can monitor the market, view currency pair quotes, and place orders just like on a real account. This is essentially a practice session that will help you become more confident in making trading decisions and managing your capital.
A demo account will help you to understand whether your trades are profitable or need to be adjusted. You will gain many skills that cannot be acquired from a regular lecture from an experienced trader or a $1000 trading course.
Although this is a virtual account, do not neglect this opportunity and trade with serious intentions. The functionality of the trading terminal is not limited in any way, as well as the duration of using virtual money. Get into the habit of conducting fundamental and technical analysis, performing calculations, and keeping current records. Every cent on your virtual account counts.
The difference between a demo and a real account
The main difference is that on real accounts you will be trading with your own funds, while demo accounts use virtual money with no real value to trade with.
The emotions a trader feels when trading with real money are completely opposite to trading on a virtual account. Our brains do not feel the seriousness of this business and are not able to react to the loss of money that is not actually ours. In real trading, emotional factors have a significant impact on the course of a trade.
Order execution speed
When trading on a demo account, orders are executed instantly. In reality, your broker needs at least a fraction of a second to accept an order and send it to the interbank market. Trades can be rejected if you don't have enough funds to open them, but unlike a real account, they will never be rejected due to size or price.
Demo accounts execute a market order at the price displayed on the screen. Trades made through a demo account will not be subject to slippage, interest or price changes. It may happen that orders are not executed at the specified value, or in the case of large orders, part of the position is bought at a price different from the expected price.
How to open a Forex demo account
- Choose a broker that suits your preferences and register.
- Download one of the trading terminals that the broker works with.
- After downloading, double-click on the application shortcut and select the trading server.
- Create a real or demo account.