What is a forex demo trading account?

What is a forex demo trading account?

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Forex trading is relatively new for retail traders that are just learning the business. It was made easier to access after the sudden explosion of technology and internet services along with the introduction of forex brokers and online trading platforms who are now actively advertising foreign exchange trade. Most of us have probably seen these ads to open a demo account with these brokers, let us explain to you what they are.

Demo forex trading account is a risk-free way to practice your trading skills. One can open a free demo trading account with their choice of brokers, which allows you to use virtual money to trade in similar situations like the forex market and get hands-on experience without the fear of losing your real money.

Online trading platforms provide us access and a platform to the forex market, but in order to avoid risking your money without any experience of forex trading, they also offer a demo account feature to get some sort of experience. They are usually available for a limited time duration but mostly it’s enough to learn the basics. Demo accounts do not turn you into an expert trader, rather they provide you with a learning experience and exposure to the market behaviors so that you do not make silly mistakes on your live account.

The platforms generally available to the users are MT4 and MT5 however some brokers have their own platforms with different layouts and features to choose from, it is up to each individual person which one they want to use. Demo accounts are beneficial to learn how these platforms work, what are the different trading tools, how to place orders, and apply your own knowledge about forex trading.

Many experienced traders also still use demo accounts to test their trading plans and strategies. It allows the traders to practically apply what they have learned during their research period and know how their strategies work in different situations. While using the demo account one can learn how technical analysis works, how charts work, how markets act, and how their choice of broker works with them.

Since there is no real money used in demo accounts it reduces the fear and stress for new traders. It is crucial for the traders to detach themselves from their emotions while trading such as fear, hope, anxiety, indecisiveness, and greed. Demo accounts are a good way to practice control over your emotions.

Forex trading on a live account will be different than that of a demo account but it is created for the reason so that aspiring traders get familiar with what they actually will have to do and face. It is highly advisable to practice on the demo accounts so that one can get prepared for the real war.

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