Complete Guide to using a Forex Demo Account

Forex trading is an activity that requires skill, enthusiasm, and a substantial understanding of financial markets. It includes studying the economy extensively, finding and exploiting resources, and a clear sense of control over your actions. It also involves a high-risk element; this is why one should take baby steps before walking and learn how to walk before running, as a newcomer to the forex industry. And there’s no better way to do this than to start trading on a demo account. The best way to learn forex trading is via a forex demo account.

What is a Forex Demo Account ?

A forex demo account, as you may have gathered, allows a trader to simulate a live trading environment, without placing any real money at risk. It helps a trader to start free online trading fairly quickly so that the trader can trade without losing real money.

Forex demo accounts serve as a simple and realistic way for a newbie to train in a safe environment. Often, some platforms provide a type of tutorial along with the demo account, while others provide a sign-in option that the user can then create and try out trading at their leisure.

Other than the functionalities and tools provided in demo accounts, the specific real-forex-account-like offers provide a safe and efficient way for beginners to learn how to trade without the risk of losing their own money or other people’s money.

Demo accounts can be an extremely useful tool for traders starting out, even after they have determined which platform they would like to use for the long term.

What is the Difference Between Demo accounts vs Real Money accounts ?

What is the difference between a demo account and a real money account? Well, the obvious difference is that real money is on the line in the real account!

The trading balance is a fictitious balance with a demo or simulated accounts. Winning or losing trades may have an effect on the balance but there is no ‘actual’ money involved. If you lose your balance, you can contact the support team to request a reset.

You need to deposit money with a real money account and the risks you take with it are huge. Particularly when using leverage or margin.

In theory, the one and only distinction between demo and real accounts would be this. In reality, almost every decision is influenced by that one adjustment.

The psychological variations between real money trading and simulated balance trading are enormous. It is much harder to click ‘buy’ on a deal when there is real money at stake, so it is more likely to grab at gains.

Competitions and tournaments are one way in which the psychological difference can be bridged. The excitement of attempting to win a competition is close to losing real money, but not quite the same. So there’s no particular solution to solving this discrepancy. It’s just a case of making sure you know that.

A good broker will ensure that any other aspect of a demo account is identical to a real account.

Why is a Forex Demo Account Important for Creating a Successful Trading Strategy ?

Success in forex trading is a direct consequence of acquiring the right knowledge, developing new analytic skills, studying the underlying trend of the markets, and applying all the information into a carefully designed trading strategy through regular practice.

Trial and error is a major part of FX trading, no matter what the various industry so-called FX millionaires might have you believe. There are no hidden ingredients to win, and unlike gambling or other unconventional money-making opportunities, forex trading and investing in the financial markets are all about managing your losses while increasing your profits. When you start investing in the forex markets, you must know that there is no Holy Grail, because profits are solely dependent on a trader’s emotional strength and willingness to bring a plan to work for him or her.

Given the size of tools available online and the various informative books published on FX trading and financial markets, it’s easy for a beginner trader to find all the information they need to enter the markets – and drown in the information overload. There is currently a large amount of trading knowledge available online which can easily confuse a novice. Yet, how does one apply this information to your trading without losing your trading capital?

Learning to trade with real money is dangerous, particularly when there is a substantial danger of losing all the money in a single trade or a consequent loss series. Real money trading entails emotions and real market situations which can have a negative effect on the trading attitude. Then there is also the possibility of compounding losses and seeing the eroding of our real money trading resources after the trade. Losing real money can have serious consequences, especially if the trader is unwilling to understand that losing is a part of FX trading.

One of the biggest greatest risks of FX trading is traders that begin on a winning run, which gives a lot of unreal confidence. When traders begin to experience a string of lucrative trades, either by executing the best trading calls that are backed by the underlying trend of the market, or through chance alone, amateurs easily become disconnected from market reality. It is inevitable for a trader to face a loss in the FX market, which can eradicate all the profits and a huge chunk of the trading capital.

It is essential for you to practice your trading skills through an FX demo account, so as to avoid the risks of the markets due to a lack of prior knowledge about how the market will react to your trading strategies. A Forex practice account lets you know the trading rules without spending real money. A demo trading account is considered the ultimate platform for traders, which not only enables beginners to acquire first-hand trading experience, but also offers a risk-free atmosphere to develop their trading skills.

Why is a Forex Demo Account Important for Creating a Successful Trading Strategy

What are the Advantages of an Account with a Forex Demo ?

If you talk to any experienced trader, their list of benefits from prototype trading accounts would be endless for beginner traders. Here’s a rundown of just a few of the advantages you might want to know about.

Learn how to Forex Trade with a Risk-Free Prototype Trading Account

Owning a forex practice account is like free forex training. That is because it helps the trader to put their training into action, by dealing with virtual funds without losing any real money. After all, those who have learned and practiced their business substantially are the most successful people in any sector – and the same applies to forex traders.

Create, Build and Check your Trading Strategies

The forex trading simulator is by far the best place to check something new about indicators or techniques that you have learned. You may even start noticing your own trading trends after a while, and you may even begin designing your own trading strategy. Also, having the freedom to trade risk-free helps traders to be more adventurous in experimenting and figuring out what works best for them.

Learn how to Control your Emotions

Loads of emotions will come into play when it comes to risking money for making money. After a few winning trades, euphoria and overconfidence will kick in. After a few losing trades, disappointment and doubt will kick in. Often these feelings will cloud the judgment of the trader on the next opportunity to sell.

Trading on a forex simulator lets you recognise these emotions so that you can create a routine and prepare to deal with the emotions. Most inexperienced traders don’t know what kind of emotions they face when winning and losing, so finding out without risking any real money, is probably best.

Familiarise Yourself with Trading Platforms

Most forex brokers offer the well-known MetaTrader site for trading. You can get familiar with trading platforms by making trades without risking real money with a forex demo account. Through this way, you can learn how to pick up a trade, how to close a trade, and how to use various resources to your benefit, such as different types of orders and trade indicators.

When you are transitioning to trading with real money, it is important that you feel confident opening, amending, and closing trades when needed. The last thing you want is to feel panic because you don’t know how to get off a trade. Instead, you might want to learn how to use stop loss and take benefit orders, so that when you’re not there the broker and trading platform can handle your trades. The key to your long-term success could be a forex practice account.

Find the Right Trading Style that Suits You

Find the Right Trading Style that Suits You

Trading on the forex market is 24 hours a day, 5 days a week. But when’s the right time for trade? Most traders tend to trade around the start of the GMT trading sessions in Tokyo, London, and New York, 12 am, 8 am, and 2.30 pm respectively. The best time to trade though, is when you have the opportunity to concentrate solely on the markets.

One of the best things about the forex market is that you can build a schedule that works with your work and family life to trade in the market. However, when you start out at first, discovering the exact routine that works for you may be a challenge. The last thing you want is for this to lead to poor trade decisions that lead to real-money losses. Using a trial account for forex trading will help you find the best routine that suits you before you begin to risk real money. Remember: it’s a marathon, not a sprint!

Adjusting The Leverage and Lot Preferences

A forex trading test account is the ideal opportunity to understand the risk-appetite and play with different leverages and lots of trading to find a perfectly working mix. Like a real account, you don’t gamble your assets, which allows you to seek out higher leverage options and use the full leverage to determine whether high-risk trading is suitable for your trading strategy. On the other hand, an online trading tutorial will also help you understand the full implications of using high leverage, as well as help you place your order sizes according to your trading equity.

Are there Disadvantages of a Demo Trading Account ?

The greatest downside of a forex demo account is the very fact that a demo account allows you to trade with virtual currency, which prevents you from feeling the feelings of losing real money in the market. A trader can feel emotionally disconnected when trading on a virtual trading balance, therefore a demo account does not reflect the true sensations of forex trading.

Many demo accounts offer the option of investing in simulated capital with hundreds of thousands of dollars which do not really reflect the actual investing conditions that apply to most trading balances. You will start your demo account as a trader with a balance that is indicative of your initial trading balance, which will help you with your business career.

A broker often provides a forex portfolio for a limited period of time and does not have real market scenarios. In a demo-trading environment, due to the virtual nature of the account, all orders are approved by the market regardless of the amount invested in a transaction. Since all types of orders are approved at the market price, this leads to a loss of market positioning perspective as well as live market conditions.

Numerous brokers often manipulate demo accounts by seducing traders with excellent performance, resulting in a false sense of confidence that will eventually lead to large loss positions. Brokers are also infamous for exploiting test sites to help a trader’s decisions, which may not be fully correct under current market conditions. Therefore, if you ever plan to trade on a demo platform, either deal with a reputable broker, or use a demo account in combination with a live trading platform to make sure that all market information correlates.

What is the Best Way to Use a Forex Demo Account ?

Build a Real Money Account Trading Strategy and Trade it on a Test Account

The first move would be to build a trading plan you’d use on a real money account. Even though you can be experimenting with what works best for you on a demo account, each trader needs a base to build upon.

Your strategy could consist of:

        When are you going to trade? Try and stick to the same time every day, because you can find out more about how the particular session moves.

        What markets are you dealing in? Firstly, concentrating on a few markets may be the best way to implement your forex training learning. Several of the FX currency pairs include the USDJPY pair and the EURUSD pair.

        What tactics do you want to trade? Decide which tools you will use to make trading decisions, and build a plan around it. This way you know what circumstances to consider when placing a trade and closing a trade.

        What methods do you use to manage risk? Over the long run, risk management is an integral part of effective trading. Decide in advance how each trade will be placed in terms of size, and how you will decide to close a profit or loss contract.

The most critical aspect here, is to try to mimic how you are going to trade on a real money account. You will then bring this strategy into effect and amend it, until you are confident enough to get on with real money.

Build a Trading Journal to Track your Trading Outcomes

It’s nice to have access to a free trading simulator, but at what stage will you move on to real money trading? Only you can decide that, but you may want to consider monitoring the results of your demo trading and set some targets to take the next move.

It can be very helpful to build a record of your historic trading operation because you can see what your results might have been if you were dealing with real money. They’ll never be exactly the same because of market fluctuations, so you can get an idea of whether or not your trading strategy works for you.

Of course, it only works if you are frank about the outcomes of your trading. This can pay off in a big way if you are. Some of the world’s most effective traders have attitude trainers and writing a report about your emotional improvement in terms of how you feel after a winning or losing trade, might also pay off. It’s a great way to prove to yourself that in live trading conditions you have the mental strength to start investing your own money.

Creating a Transfer Target to a Live Trading Account

The day will come when you want to transition to a live trading account and begin to reap the rewards of your hard work under conditions of the live market. When the day comes though, it’s up to you. Therefore, the key question that you have to ask yourself is what first needs to happen before you make that transition?

Some traders like setting goals. For example, on your demo account money balance, it could be hitting 10 per cent, or it could be simply reaching 20 trades, or it could be attaining three months of profitable trading first. One of the advantages of beginning with a demo is that as your platform, it can offer a seamless transition into a live account.

What are the Different Types of Demo Accounts ?

If you’re ready to start looking into the available demo accounts, step one is doing your research work. Many of the best online forex traders have many different types of accounts available, so it’s all about figuring out what works best for you.

Some brands may have access limitations for their trial accounts including time limits, virtual cash limits, and more. A good place to start is to read carefully what your chosen platforms offer.

Here are some of the types of demo accounts you might find to get you started.

No Time Limit/Unlimited Accounts

As one of the most popular demo accounts you’ll encounter, many but not all, successful forex trading platforms will offer an unrestricted demo account to try. This means that once you log in to your demo account – which will be a different point of access to the regular trading platform in most cases – you are free to test your trading as little and as much as you want. There is no expiration. Unlimited accounts are not only good for beginners, but they are also perfect for long-term testing of new strategies, back-checking, and brushing up on your trading.

No Registration Accounts

No registration test accounts are accounts that you can use without having to sign up for them. This means no marketing emails, no personal information disclosed, and no communications. A no-registration account is an excellent choice for those who want a quick peek of what a trading platform can offer. However, accounts without registration will be lost immediately when you leave the site, meaning you can’t get back to continue your current trades or explore a new activity or concept.

Free Accounts

Demo accounts are for the most part free of charge. Rarely do you come across a site that asks you to pay or put money into what is basically a testing process. No trading costs will apply to those who use demo accounts, because none of the money used is actual. This ensures that you can access trial accounts at no cost for several different trading systems, allowing you to make a comprehensive and appropriate decision on which platform is right for you, based on the first-hand analysis.

What are the Different Demo Account Platforms ?

The next move is to look at what’s compatible with your current setup when it comes to accessing the user accounts you want the most. There are several different choices for trial account applications available out there – whichever you pick up is up to you:


Also known as MetaTrader 4, this famous platform is a widely used trading and analytics tool. Although a newer version is available, for many traders MT4 remains the favourite. Thanks to its sturdy design and familiar controls, this makes it a top option for many long-time traders. Metatrader 4 is used for Windows OS.


MetaTrader 5 is the newest iteration of this platform for Windows OS, providing a multi-functional platform with a range of new features not included in MT4. Starting on this platform for new traders, this famous developer provides you with the most up-to-date alternative on the market.

the Different Demo Account Platforms


MetaTrader is primarily a Windows OS tool, but some people may find workarounds within the Mac OS to use this popular program.

Nevertheless, the use of explicitly brand-designed systems is the alternative for most traders, with many businesses selling their own proprietary Mac OS applications alongside Windows and Linux options.

Demo Account Mobile Applications

Mobile technology advances have meant great things for forex traders. You can now not just trade from anywhere, but all the knowledge is available with just a tap and a swipe at your disposal.

The best forex apps for iPhone, Ios, and Blackberry, are available. There are plenty of choices out there, especially when it comes to apps that are companions to a wider desktop platform.

Mobile Apps

In addition to desktop apps, the number of traders using their mobiles for forex on-the-go trading has steeply increased. This may be fully mobile systems or optimised applications for existing trading platforms.


A UK-designed Spotware platform that supports charting and trading, cTrader is a sleek and extremely user-friendly pared-back alternative platform. cTrader is an excellent forum of choice for new traders looking for something quick and fast.

Where can I Download Apps ?

Downloading forex trading software can be as simple as visiting the iOS App Store or the Google Play Store and discovering an app that looks interesting. Also, you can check for similar applications directly if they’re something you’ve already tried on your phone, or just go straight to the website of a particular broker and grab your smartphone app from them right away.

Demo Account Contests and Competitions

The contests and competitions are among the most important add-ons that many traders benefit from for different forex trading platforms.

Although these are ubiquitous on platforms for real money trading, they are also increasingly popular to use with demo accounts. This adds an extra layer of realism to virtual trading, and helps bridge the gap between testing trade and actually doing it. It is well worth exploring demo accounts that provide additional engagement like this because it offers a clear idea of how real money trading will appear to those who are not quite there yet.

Typical demo-account contests and competitions can include weekly, monthly, and even regular rushes to hit specific numbers and beat your fellow demo-users. For certain situations, these wins can lead to real cash prizes,  providing the trading rush without the risk of using your own money.

It makes competitions an ideal middle ground between using your own money and only training in a demo environment for nothing.

What Should you Know as a Beginner ?

As a complete beginner in the forex trading world, what should you know?

Before you start trading with real money, the most important thing to understand is what exactly you want from a platform. Comparison factors will encourage you to find channels that work for you, as opposed to those that are usually just ‘the best.’

Do you want incredible features, or do you want as many forms of analysis as possible? Do you want something you work on from a phone, or would you prefer a desktop? Do you use a Windows operating system or Mac?

To find the right forum for you, means doing your homework to understand what you need and to work towards it. The joy of demo accounts is that they’re absolutely safe. After you’ve researched the market, you’ll be in a better position to find something that fits you. Know what’s important to you. You can compare accounts based on your desires, instead of just rushing out there for the best-reviewed site right now.

What Should you Know About your Location ?

Given your location as a trader, there may be some changes in availability. Most brokers will offer the demo account to the same regions where the real account is being offered. So, if a company accepts traders from say, South Africa, you should be able to open a demo account in South Africa too.

However, it’s not always that easy. While regions such as Asia and South Africa (Singapore, Philippines, India, etc.) will find things straightforward, regulations elsewhere can have an effect. Traders in the US, Canada, and the EU can find that regulators are having an impact on what brokers are able to offer. Some options may be inaccessible.

But in very general terms, if you can open an account with real money, you should first be able to open a demo account.

Finding the Right Account for You

It’s time to track down the elusive dream platform once you have a clear idea of what you’re looking for.

Demo accounts here can be useful, helping you to narrow down which platform is best for you. Once you’ve found a platform that looks great, don’t jump straight into trading. Instead, make good use of their trial account to ensure that you are fully familiar with what this platform entails. You can’t go wrong with more knowledge and experience.

If you are testing the forex trading waters for the first time, your best friends could be demo accounts. They can even be beneficial for new traders if used the right way, both in terms of competitions and knowledge gained from increased learning time and risk-free interaction.

What Should you Know About your Location ?

Given your location as a trader, there may be some changes in availability. Most brokers will offer the demo account to the same regions where the real account is being offered. So, if a company accepts traders from say, South Africa, you should be able to open a demo account in South Africa too.

However, it’s not always that easy. While regions such as Asia and South Africa (Singapore, Philippines, India, etc.) will find things straightforward, regulations elsewhere can have an effect. Traders in the US, Canada, and the EU can find that regulators are having an impact on what brokers are able to offer. Some options may be inaccessible.

But in very general terms, if you can open an account with real money, you should first be able to open a demo account.

The Move From a Forex Trading Demo Account To a Real Account

The most important part of forex trading is going from an on-line trading simulator to a real trading account. Whatever time you have spent on an FX demo account, brace yourself for a swarm of emotions including fear, doubt, greed, indecisiveness, overconfidence, and revenge when putting real money on the line. Leave your emotions at the door, and approach trading as you have learned in your demo account. Only make the switch when you are sure about your trading strategy and your attitude, since even a slight deviation from your regular trading routine can mean a world of difference between winning and losing.

If you don’t have full trust in making the move, you can always start trading with a micro account without spending all your money. Micro accounts allow you to experience real-life emotions and various other trading aspects that are obviously absent from a demo account. When you start getting confident with your actual trading performance, you might consider making the switch to a standard account with all of your money being invested in the market.

The Move From a Forex Trading Demo Account To a Real Account


Most FX brokers offer a free demo trading account, but some brokers can ask their customers to deposit money before access to a trading account is granted. You should also note that there are countless brokers in the industry, and you have the option to pick a company that will fulfil your needs. You should not be tempted or coerced to open an account against your will, as you can easily open and trade on a prototype trading account with virtually all of the market’s leading mainstream brokers. It’s also normal for some brokers not to offer an FX trading demo, so always make sure the broker you select provides you with all the necessary resources to be successful in the market.

We’ve seen that most traders hop right into live trading without having to use a demo. That phenomenon has many explanations. First and foremost, novice traders are curious about the markets and want to invest in the market immediately without having to bother understanding the markets properly. New traders often have the impatience to make as much money as possible in a short period of time, pushing them to use high leverage and gamble all their money in one deal. Instead of considering FX trading as a business, most traders enter the market in search of that one million dollar trade that will make them rich overnight. Unfortunately, all undisciplined traders are punished on the Forex market.

You should be able to access all of the financial instruments on the forex market via an FX trading demo account, but for different reasons, some brokers may want to restrict the number of assets. Many brokers offer a broad variety of resources from stocks, indices, shares, treasuries, FX currencies, securities, CFDs, and ETFs. On the other hand, some brokers only sell up to 20 to 25 currency pairs, and no other resources, which is not strange in the industry. It’s up to you to find the right FX broker that offers all the instruments to suit your trading needs.

A demo account for forex trading is ideal for both beginners and professionals alike. Demo trading is an opportunity that allows traders to try different strategies and check new indicators while experimenting with new ideas, without risking their money. One should not mistake demo trading as a novice move into the FX market; rather, it would be worth noting that demo trading is a vital part of the industry and is clearly a must for all traders, irrespective of their experience. Whether you are an inexperienced trader or an experienced investor, demo trading should be your primary option of trading before you embark on new trading strategies or new markets. A forex account with demo trading will help prevent major capital losses, which should be your primary aim in forex trading.