A demo account is, in simple words, a virtual trading account for working in financial markets, opened by the trader through registration on the Forex broker’s website. A demo account is completely similar to a real trading deposit and is intended for practicing trading before opening a real account.
The only difference between a demo account and a real trading deposit is the ability to carry out trade transactions without investing personal money, using “virtual currency” for any amount (at least $1 million). Of course, losses and profits on a demo account are also “virtual” and do not in any way affect the well-being of the Forex trader.
How to open a demo account?
Brokers offer several ways to open a demo account:
- Download the terminal from the broker’s website and in the terminal in the menu section File-Open account, select the broker’s “demo server”, and in the next window select “New demo account”, then enter arbitrary data, as well as the size of the deposit and leverage ( Don't forget about and your new demo account is ready:
- However, brokers are increasingly abandoning the first path in favor of the second, when before opening a demo account a minimum registration is required (with the introduction of an e-mail address/phone number):
This is how brokers collect information about the target audience. Next, you will be provided with a login and password to log into the demo account in the terminal.
Deposit size and risk-money management rules
You may have heard or read that you should start trading on a real account with a minimum amount, which can be considered as a training amount. On the one hand, this is correct, but there are nuances.
Trading is governed by the rules of money management and risk management. And the most important thing about them is the size of the bet when opening a transaction; it should not exceed 5%, and preferably 1-2% of the amount in the account. If we remember the basic rules of risk management, we will understand that the smaller the amount in the account, the lower the limit on the number of unprofitable transactions per day.
And here nuances emerge. First, with a deposit of $10 and a minimum bet of $1 under the terms of trading on the platform, you will not be able to trade according to the rules of money management.
1 dollar is 10% of 10 dollars in the account. If the deal closes in the red, which is not at all impossible, the next one will be opened in violation of the rules. What this will lead to is obvious - you will lose your $10 deposit in less than 1 day.
It turns out that the minimum amount is reasonable, but only within certain limits. The size of the first deposit should be such that you can open as many trades per day as planned in the trading plan, without violating the rules of risk management. Simple math. Carry out the calculations and determine the optimal amount for yourself.
The same applies to risk management rules. When setting limits on losing trades for yourself, you must have an amount in your account that would allow you to trade within the rules and gain practical experience with acceptable losses. Agree that when your account has 10-20 dollars and the loss limit per day is 1-2 dollars, it is difficult to succeed and somehow prove yourself.
And another important point. Be prepared to top up your account with real money from your own savings. This should not be money borrowed, the last allocated for important purchases for you or your family. In trading, only clean, personal, free money brings success. Just remember this and don’t drive yourself into a hole of debt before you learn how to earn money consistently and with pleasure.
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Demo accounts without registering with a broker
Demo accounts without registration are provided by such brokerage companies as
| Broker name | Year of foundation | Trading instruments | Licenses | |
| 1. | Alpari | 1998 | metals, energy, indices, currency pairs, cryptocurrencies | — |
| 2. | Saxo Bank | 1992 | currency and commodity futures, stock indices, currency pairs, ETFs, stocks, bonds, derivatives | Danish FSA, Consob, Czech National Bank, Bank of the Netherlands, ASIC, Monetary Authority of Singapore, FINMA, Bank of France, Central Bank of the UAE, Japanese Financial Services Agency, Securities and Futures Commission in Hong Kong. |
| 3. | FxPro | 2006 | indices, commodity futures, stocks, currency pairs | FCA, CySEC, FSB, Dubai FSA, BaFin, ACPR, CNMV |
| 4. | Grand Capital (Grand Capital) | 2006 | stocks, indices, commodities, cryptocurrencies | — |
Why does a trader need a demo account?
Getting to know the market.
For beginners, it is important to understand and look at real trading - charts, indicators, oscillators. Learn to place Buy and Sell orders, Buy Stop and Buy limit, Stop Loss and Take Profit; understand what different timeframes show, etc.
Testing ready-made strategies and trading techniques.
Before using a new trading system on a real deposit, Masterforex-V traders advise you to first see how it works on a demo account. This way you will work out the strategy, perhaps change something in it for yourself (and ultimately develop your own trading system) and all this without the risk of losing money.
Testing the broker itself.
When choosing a broker, you need to look at the actual competence of the brokerage company, how its advertising appeals correspond to reality (are there any problems with the terminal, how are quotes going in a calm market and at the time of news release, etc.).
Risks of trading with virtual money
Training is great. But imagine that you are learning to drive a car using a computer simulator. For a month you drive along the highway, park, drive uphill and finally feel like a real professional. Get behind the wheel of a real car. Will you feel as free as at home in your chair at the computer?
What risks do I see in make-believe stock trading:
- With virtual money, you could take more risks because you were less likely to fear a possible loss. With real capital, this fear may return, just as passion, greed and other emotions will appear that prevent you from objectively assessing the situation on the market and making an informed decision. No matter how much you practice, real investing will feel different.
- It’s even more dangerous when you transfer the euphoria from successful transactions to a real account. Margin trading allowed you to double or triple your capital in a month. You begin to think that your talent contributed to this. But the market will put everything in its place. Still, one month is a very short period of time to assess all investment risks.
- Long-term investors will not be able to evaluate the effectiveness of their investment strategy at all. They only need a demo account to get acquainted with the interface of trading platforms.
- Many investors do not use such complex programs as QUIK or MetaTrader. Brokers now offer their own developments, which do not need to be studied in advance. They are intuitive.
Which broker to choose when opening a demo account?
Masterforex-V traders advise choosing a broker from the top league of the Forex Academy Masterforex-V broker rating. Why? The methodology for calculating the rating is based on taking into account objective data based on 22 criteria (for example, the year the brokerage company was founded, the presence of branches, the presence of licenses from serious financial regulators, the size of spreads and swaps, the presence of reviews from traders, etc.), which made it possible to identify 12 brokers whose you can open a real deposit.
| Broker name | Year of foundation | Do you have a demo account? | Trading terminals |
| NordFX | 2008 | Yes | Meta Trader 4 |
| Dukascopy | 1998 | Yes | JForex, Meta Trader 4 |
| FxPro | 2006 | Yes | Meta Trader 4, cTrader |
| Alpari | 1998 | Yes | MetaTrader 4, MetaTrader 5 |
| FXCM | 1999 | Yes | Meta Trader 4, Trading Station, Active Trader and MirrorTrader |
| FOREX.com | 1999 | Yes | Meta Trader 4, FOREX Trader Pro |
| FIBO Group | 1998 | Yes | MetaTrader 4, MetaTrader 5, cTrader |
| Swissquote | 1996 | Yes | MetaTrader 4, MetaTrader 5, Advanced Trader |
| Interactive Brokers | 1977 | Yes | Trader Workstation, WebTrader |
| Oanda | 1996 | Yes | MetaTrader 4, MetaTrader 5, fxTrade |
| Saxo Bank | 1992 | Yes | SaxoTraderGO, SaxoTraderPRO |
| FINAM FOREX | 1994 | Yes | Meta Trader 4 |
Basic rules for a novice trader
Well, now that Forex for beginners is more or less mastered, I think we can remind you, dear friends, about the important rules of making money in the market:
- Before you start trading, you need to thoroughly study the theoretical component of trading . This will teach you to quickly navigate the basics on which trading in all kinds of markets is built using the tools that are available to traders in trading terminals, and analyze Forex charts.
- Be serious about which broker you choose for Forex trading. A significant part of your trading success in the market will depend on how well you choose an intermediary for yourself.
- Don't trust swindlers and scammers. To avoid becoming a victim of unscrupulous exchange participants, I strongly recommend that you study my list of Forex brokers. It presents only reliable and proven companies that value their own reputation, and do not resort to searching for isolated opportunities to earn a penny.
- Control your emotions , do not give in to excitement, panic, be calm in making your decisions.
What quotes does the broker give on a demo account?
Typically, the broker does not restrict access on a demo account to all quotes for currency pairs, CFDs, commodity futures, cryptocurrencies, etc., which it also provides to real traders.
You can find this data in our dossier for each broker in the Masterforex-V rating.
In the “Trading Instruments” section you can see
- currency pairs: USDJPY, USDCHF, EURUSD, GBPUSD, USDCAD, USDRUB, EURRUB, NZDUSD, AUDUSD, USDUAH, USDNOK, USDCNY, USDBYN, USDSEK, EURCHF, EURNZD, EURJPY, EURGBP, EURAUD, EURSEK, GBPCHF, EURCAD, EURNOK, GBPAUD , GBPJPY, GBPSEK, GBPCAD, GBPNZD, GBPNOK, CHFJPY, AUDCHF, AUDJPY, NZDCHF, CADCHF, NZDJPY, CADJPY, USDSGD, USDTHB, USDINR, USDILS, USDPLN, USDHKD, USDZAR, USDTRY, USDMXN;
- cryptocurrencies: Ethereum, Litecoin, Bitcoin Cash BCH, Ripple, EOS, Monero, OmiseGO, Ethereum Classic, Binance Coin, Stellar, Zcash, NEO, IOT, TRON, Cardano, NEM, LINK, DASH, Tezos;
- commodity futures - natural gas, Brent, WTI, URALS, Oman Crude Oil, gas oil, diesel, biodiesel, fuel oil, gasoline, coal, electricity, kerosene, liquefied gas; barley, corn, wheat, rice, soybeans, sugar, oil, oats , soybean oil, cotton, live cattle, cocoa, coffee, milk, cheese; gold, palladium, silver, platinum, copper, nickel, aluminum, lead, steel, tin, zinc, cobalt, molybdenum, brass, iron ore, lithium, ethanol, methanol, polypropylene;
- stock indices (Dow Jones 30, S&P 500, NIFTY50, NIKKEI225, Euronext100, CAC40, BEL20, AEX25, PSI20, TOPIX Core 30, FTSE 100, SSE Composite, S&P/ASX 200, JTOPI) from the world's leading exchanges (NYSE, TSX, TSE, LSE, SWX, HKE, NASDAQ, MOEX, BSE, KRX).
As for spreads and swaps, for a demo account the broker usually takes data from one of the popular account types.
Let's sum it up
Now that you know the pros and cons of a Forex demo, you can decide whether you need this experience or not . If you find it necessary to gain experience in trading before moving on to real trading, then the instructions for opening demo accounts with the best brokers will come in handy. Find your ideal mediator, learn, develop, invest in yourself and improve your skills. Remember that you cannot catch a fish from a pond without difficulty. Take the opportunity to hone your skills, and only then start taking risks. Good luck to you, sobriety of thought and patience . See you soon!
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When should I switch from a demo account to a real trading account?
No matter how good it was in the virtual warm bath of a demo account, but virtual trading will not give real profit, the time has come to switch to a real trading account. On the Internet, they advise switching after a few weeks or even months, or after working out 100 trades, 60%-70% of which should be positive, etc.
Experienced Masterforex-V traders advise switching to a real trading account only after you have gone through 3-4 reversals of the medium-term trend, understanding each movement of the instrument.
Sincerely, wiki Masterforex-V - free (school) and professional training courses Masterforex-V for working on Forex, stock, futures, commodity and cryptocurrency exchanges
