Are Demo Accounts Necessary for Forex Trading Beginners?

Forex trading is a vast world to explore for beginners and often seems so vast that some can be intimidated to embark on the journey. Forex demo accounts are one of the most important tools they can have in their trading arsenal.

Forex beginners will need a forex demo account to simulate how the foreign exchange market works. In this article, we will introduce why should you use a demo account and give you a list of the best forex brokers to register for a demo account with.

What Is A Forex Demo Account?

Demo account is a virtual trading account. The word "demo" is short for "demonstration". A forex demo account is also referred to as 'Paper Trading Account' which is used for practicing trading or to test a new trading strategy without any risk to actual money. Instead, you will spend virtual money there so you may stumble into foolish mistakes with much less headaches.

Most Forex brokers offer two types of accounts to their clients: live and demo. Live accounts are the ones used for actual trading. However, since there are many financial risks associated with live accounts, and there are plenty of beginners who are just starting out their trading career, the brokers have a demo account up to their sleeve.

All Forex trading beginners should use a Forex demo as their first Forex account to get a feel of what trading the currency market is like, as well as to get used to the broker and the trading platform they are using. Essentially, it enables traders to practice their trading skills along with quite a few more enticing benefits.

What are the Benefits of Trading with a Forex Demo Account?

Forex demo account is very important as you don't want to risk losing your investments due to lack of knowledge and practice. In demo account, you can:

Trade Forex at No Risk

A demo account lets forex beginners put their training into practice in a close to real life environment without putting their real money at risk. This allows them to make common beginner’s errors while they learn without having to pay for the consequences out of their own pocket.

Familiarize Yourself with Your Broker

By opening a Forex demo account, you can familiarise yourself with the trading platform by making trades without putting real money at risk. This way you get to learn about how to take a trade, how to close a trade, and how to use different tools to your advantage.

This can also be a great way to check out the quality of the broker's overall services before committing any real trading funds to make sure that they are the sort of trading partner you will want holding your account.

Test Your Trading Strategies

For an experienced trader, perhaps the biggest reason for using a demo account is to try out new strategies. Most traders will have one or more strategies that they feel completely comfortable with. Yet, in different economic situations it may be necessary to turn to new strategies that they have never used before.

Learn to Manage Your Emotions

One of the most challenging aspects of trading for many people involves learning how to manage their emotional responses to winning and losing trades in such a way that it encourages overall profitability.

Most beginner traders don't know what kind of emotions they will face when winning and losing, so it's probably best to find out without risking any real money.

Learn About Technical Indicators

To establish a carefully thought-out foothold in a constantly changing forex market, traders need to be well versed in technical indicators. Demo accounts will help them to know when and where to enter and exit trades. They can learn about price actions and how prices react on support and resistance levels.

Where Can You Start Demo Trading?

Most of forex brokers offer free demo accounts so you can test the brokers and their platforms with virtual money. Give it a try with some play money before using your own cash. Here's a list of the best demo brokers:

1. Forex.com

While not a discount broker, FOREX.com is a trusted brand that delivers an excellent trading experience for forex and CFDs traders across the globe. You can open a demo account with the broker by the link: https://www.forex.com/en-uk/.

2. Swissquote

Swissquote is publicly-traded and regulated in four tier-1 jurisdictions, making it a safe broker for trading forex and CFDs. You can open a demo account with the broker by the link: https://en.swissquote.com/forex/open-forex-demo-account.

3. XM

XM provides access to the financial markets in over 1000 financial instruments including forex, equity indices, precious metals, and energies. You can open a demo account with the broker by the link: https://www.xm-direct.com/register/account/demo?lang=en.

4. Dukascopy

Dukascopy is a broker that has the support of the Swiss government, which allows trading in currencies, crypto-currencies such as bitcoins, raw materials, energy, bonds and shares. You can open a demo account with the broker by the link: https://www.dukascopy.ch/swiss/english/forex/demo-fx-account/.

5. FXCM

FXCM is a leading provider of online foreign exchange (FX) trading, CFD trading, spread betting and related services. You can open a demo account with the broker by the link: https://www.fxcm.com/uk/forex-trading-demo/.

6. Exness

Founded in 2008, Exness is a broker which has since gained steam in the market and now boasts nearly 60,000 active client accounts from all over the world. You can open a demo account with the broker by the link: https://my.theexness.com/accounts/sign-up#_ga=2.130741644.2099274582.1608258608-837054530.1608258608.

7. Pepperstone

Pepperstone is an Australian forex broker that also offers CFDs. It was established in 2010 and opened a London office in 2015 to be able to better serve its European clients. You can open a demo account with the broker by the link: https://secure.pepperstone.com/register?legalEntity=demo&locale=en.

8. FXTM

FXTM is an international online forex broker offering financial services in forex, CFDs on spot metals and CFDs on Commodity Futures, Indices and Shares. You can open a demo account with the broker by the link: https://www.forextime.com/register/open-demo-account?myfxtm=open-demo-account.

9. LMAX

LMAX Global is a regulated broker for FX, metals and commodities worldwide. Servicing retail brokers and professional traders. You can open a demo account with the broker by the link: https://register.london-demo.lmax.com/registration/LMB/?language=en_GB.

10. Avatrade

AvaTrade is licensed as a regulated broker in the EU, Japan, Australia, South Africa, UAE and the British Virgin Islands. You can open a demo account with the broker by the link: https://www.avatrade.com/demo-account.

Conclusion

Overall, opening demo accounts is the first key step that beginners should take before setting up a real account. Even after you decide to trade live, demo trading can be very valuable. Many successful traders will test strategies in a practice account before they try them out with real money.

Most traders falter when the time comes to switch to a live trading account. Experts recommend a minimum of 3 months' worth of successful demo trading before moving into a real money account, but the time may vary for different traders.