A forex trading demo account is a special type of trading account that comes equipped with virtual funds that can be used to place trades and open positions.
Success in forex can be complicated as many factors influence the market. However, you can create a demo forex trading account for free. These accounts use price data from the live forex market, enabling you to practise trading and develop strategies without incurring any costs. Let's look deeper.
Pros and Cons of Forex Trading with a Demo Account
Opening a demo trading account for forex is an excellent way for beginners to start to understand trading. Some ways new traders can leverage a forex trading demo account include:
Understand Trading
Trading can become confusing fast. There are buy/sell positions, order types, leverage, fees, and many other factors to consider. Trading forex in a demo account can be ideal for helping you understand different aspects of the trading process so you are less likely to run into issues when using real funds.
Practise Trading Strategies
Traders use specific strategies to analyse price and volume data with the goal of improving their win rate. For example, when traders identify the head-and-shoulders pattern, it signals a currency pair's current price trend could reverse.
However, chart patterns and trading strategies require consistent practice to be used accurately and effectively, so a forex trading demo account is a great solution to sharpen your skills for free.
Learn Technical and Fundamental Indicators
Technical and fundamental indicators aid traders in identifying potential opportunities. There are thousands of options, ranging from momentum indicators like the Relative Strength Index (RSI) to global economic factors like inflation.
At ActivTrades, we offer forex demo accounts for free. These accounts enable you to test combinations of various technical and fundamental indicators to see which performs best and suits your strategy.
Unlimited Forex Demo Account
Forex demo accounts allow you to refill your trading funds for free if they run out. As such, you can learn advanced techniques that require lots of practice, backtest new strategies, and familiarise yourself with the broader market with zero time restrictions or cost, which live trading would incur.
Forex Trading Demo Cons
While forex trading demo accounts are great tools for those learning to trade, there is a downside to be aware of. Although you can win trades to increase your portfolio size, the funds are virtual, and traders cannot swap them for real money.
Therefore, traders should carefully consider whether they're ready for a live account. If they're consistently winning trades, respecting risk management techniques, and have a strong understanding of the market, it could be worth swapping demo forex trading for the real thing.
How to Open a Forex Trading Demo Account with ActivTrades
Now that you understand the pros and cons, let's discuss how to open a forex demo trading account. The process is simple and can be completed in just a few minutes.
1. Register with Broker - The ActivTrades signup process is quick and requires inputting only a name, email address, password, and country of residence.
2. Create a Forex Trading Demo Account - Once you have verified your account, you can head to the personal area. From here, select "Open Demo Account" under the "Accounts" section.
3. Account Specifications - Next, choose whether to open a forex demo account for MT4 (MetaTrader 4), MT5, or ActivTrades. Afterwards, select a trading currency, a leverage amount, and the number of virtual funds you require.
4. Open Your Forex Demo Account - To finish opening your forex demo account, click the green 'Try Now" button, then select "Trade". ActivTrades will transfer you to the trading interface, where you can open positions and practise with virtual funds.
How to Trade with Your Demo Account on ActivTrades
ActivTrades offers a few different types of demo accounts that people can use to learn forex trading or to help familiarise themselves with market-leading trading software. The various types of supported forex trading demo accounts include:
ActivTrades
ActivTrades offers a proprietary trading interface on which users can perform in-depth analysis and open/close positions. With advanced charting tools and a selection of popular currency pairs, including GBP/USD and EUR/GBP, it's an excellent option for those who don't want to use external software.
MetaTrader
ActivTrades also offers a forex demo account for MetaTrader 4 and 5, which can help users learn how the world's most popular trading software operates. As MetaTrader can be confusing for beginners, having access to an MT4-friendly demo account is a significant advantage for a broker and its users.
FAQs
Is demo trading the same as a real account?
Real and demo forex trading accounts share many similarities, such as price data, how an order is placed, and which factors affect an asset's price. The primary difference between the two account types is that people cannot withdraw funds earned through demo trading like on a real account.
How does a demo account work in forex?
In forex or any other market, demo accounts are a good option for those who want to learn how to start forex trading for free. Instead of requiring users to deposit funds, demo traders are given virtual funds that can be used instead of real money, removing trading risk and substantially reducing the barrier to entry.
Are forex demo accounts accurate?
Some forex trading demo accounts use false price data, but it's uncommon. The vast majority of worthwhile demo accounts connect to the live market, enabling people to view accurate prices and develop strategies in a space representative of the real forex market.
Is a demo account real money?
Although most demo trading accounts in forex use live price data gathered from the market, users cannot withdraw trading profits from them. This is because forex demo accounts are a practice environment and use virtual funds that cannot be exchanged for real money.
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
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