How To Trade With A Demo Account?

By Author: jessica smith
Total Articles: 18
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Either you are going to start trading or you are an experienced trader, you must require a trading account on any investment or brokerage platform. It is an essential requirement of any trader who is interested in trading. The majority of forex brokers offer two different accounts to their clients such as a live trading account and a demo account.
A live trading account is an original trading account that consists of real money, real instruments, and producing payout. A demo account is a replica of a live account on which you can experience the same trading environment as a live account.

It is a very good option for newbies who are stepping into the trading world. Instead of risking their money on a live account, they can open a demo account that allows them to use virtual trading funds. Usually, a live account and a demo account are quite similar in so many ways such as reflecting price trends and swings, offering trading tools and indicators, and most importantly an overall realistic trading experience.

A demo account may also provide tools to learn ...
... the basics of trading complex instruments such as forex, stocks, commodities, and cryptocurrencies. On this account, you can also learn the basics of trading and How foreign exchange markets work. This platform may also help you in understanding which type of instrument is suitable for achieving their trading goals and which strategy is perfect for them.

If you are thinking that a demo account is only for new traders, It is not correct even the professional traders may also find it useful. They use demo accounts for testing their new trading strategies and check out how different spread levels perform for them. A demo account is proven ideal for both beginners and professional traders.

A sweet juicy fruit that consists of a hard seed similarly to a demo account may also come with some drawbacks. As we all know it is useful for testing strategies and helpful in instrument selection but in some terms, it may not deliver the same experience as a live account.

The Aim of Demo Trading

The aim of demo trading is not only to make as much money as possible. Similarly, that shouldn’t be our goal with the live account also because making money needs a methodical trading approach and well-performed trading plans. Your only aim in demo account trading is to design such plans and test them for further use at the time of live trading. A plan which is producing a repeatable result will lead you to success. If you follow demo account trading plans on the live platform will help you in generating profits for several months.

When you open a demo account try to keep your aim is to create a plan and follow it. If your plan works as you are thinking it is very profitable for you, but if the plan does not work according to your plan, try to focus on something else.

Executing a plan is not an easy task. Our mind will always strike us to place orders which are not suitable as per our plan and sometimes due to this we ignore trades which are totally fit in our plan. Our minds sometimes force us to hold onto losing trades, letting them climb, and reduce profits and increase losses. All these mistakes take place when our emotions are not in our control. I know we can't ignore them but we can learn how to control them at the time of decision making. Always make your decision on the basis of practical thoughts.

The importance of demo trading is that we learn to work on our discipline in a no-risk environment. As long as we continually only receive the trade as we are thinking, we are sharpening our discipline skills. It will only enhance by being disciplined. There is no shortcut available for rising discipline.

Some traders suppose a demo account is a playground because it may not consist of any type of risk. Because of this mentality, They take big risks, create trades that are not a part of your strategy. They make decisions emotionally in place of using methods. Due to this, the demo accounts start losing their effectiveness. The demo account is proven useful only in one case if you treat it as a live account and place the trade that aligns with your trading strategy. Follow this rule and you are all ready for the eventual switch to a live account when you start generating consistent profits in a demo account.

Practice Trading on a Demo Account

The best method of day trading or swing trading, on the basis of expert’s research, is the Market Replay Simulator. It permits the trader to download historical trading data and then trade them as they are. Place orders and see how things will take place as the price unfolds step by step, showing exactly what you would have seen had you been trading that day live.

Forex replay simulator: The SoftFx Forex Simulator offers forex trading by the MetaTrader 4 platform with an advanced simulator providing control to 10 years of historical days to trade in 33 currency pairs, several commodities, and stock indexes. To get access to this software you need to pay $99 for a fee but you can only use this on PC, not available for Mac. The good thing about this software is that it provides an MT 4 trading platform which helps you in improving your experience on the platform.

Futures replay simulator: NinjaTrader is one of the popular futures trading platforms providing a Market Replay Connection. This platform offers a free demo account that remains active for 30 days on which you can use the market replay connection for free of cost during the time period.If you want to use NinjaTrader on your live account, you need to pay $999 and you can access its free version by trading through one of its affiliated brokers such as Brokereo, T1Markets, ABinvesting, HFTrading, IGMFX, Capixal.

Stock replay simulator: TradingSim is the best option for replaying and practising on stocks. The simulator charges $297 per year, per market.

Differentiation between a Demo Account and a Live trading account
Some factors which create differences between a live account and a demo account. Here we are discussing the three main factors are:

Fear: A live trading account consists of a fear of losing money, but in a demo account trading there is no fear of losing money. You can overcome this fear by dealing virtual money as real money and make trades as you are trading on a live account.

Slippage: In demo account trading, most of the time you get the price as you want. Your entries and stop-loss are complete at the costs you specify, But at the time of live trading, it does not happen. Market orders can fill at different costs which are totally different from your expected and stop-loss orders are particularly susceptible to slippage when the price has fluctuated very quickly against you.
Position Size: In the demo account, you will receive the same position size which you ordered, no matter what it is. For example, if you order 1000 shares of fast-moving stocks, you get 1000 shares. But It is not possible with a live account. The live account takes a decision on the basis of how other traders act.

Conclusion:

A Demo account is the best feature of the forex trading platform. Traders can access a demo account from the brokerage platform or from any investment platform. The broker does not charge any additional costs from a demo account rather than a minimum deposit of a live account. In this article, we provide you complete details about a demo account.

Frequently Asked Questions for a Demo Account

01 How to open a demo trading account?

You can easily open a demo account through your broker platform. Most of the brokers who offer forex trading must provide demo account options to their clients. For opening a live account, clients need to submit various identical documents but demo accounts do not ask for more documents.

02 What are the benefits of virtual Forex trading?

It does not matter whether you are a beginner or an experienced one, the forex trading demo account will help you in enhancing your trading strategy level. If you are new in the forex trading world, a demo account will make you familiar with the methods in which the exchange market works. It may also be beneficial for professional traders for testing their new trading strategies and skills.

03 Who can use a demo account in the most effective way?

A demo account offers a platform on which people can trade forex, stocks, and other assets. A demo account provides virtual money to make trade without charging any costs. It is useful for both experienced and beginner traders as we mentioned in the above answer.