In this article, we will talk about forex (foreign exchange) demo accounts. Most beginning forex traders are aware of such options, but only a few of them try working on demo accounts before putting real money at stake. Meanwhile, best forex demo accounts allow new traders and advanced traders to implement new ideas without having to take the high risk. Real quotes, real dynamics, real ECN trading rules, and no risk that your retail investor accounts lose funds – there are many benefits of a demo account — let’s discuss all of them.
The article covers the following subjects:
What is a Forex Demo Account
A Forex demo account is a special trading account type that replaces a real money account (be it a micro account or a standard account) with virtual money while maintaining all other rules of exchange trading. In other words, a demo account gives you access to real exchange trading without the high risk of losing money rapidly.
The first and main reason for creating demo forex accounts is to allow beginners to practice trading without risking real money and not to let them find themselves in a situation where their retail investor accounts lose funds. At the dawn of the Forex trading market, there were no demo accounts and beginners had to practice with their investments, any mistake can increase trading costs or be worth them their own funds. When demo accounts appeared, the problem was solved.
Today, demo retail investor accounts are used not only by beginners, but also by professionals, as they allow you to test online trading strategies without high risk. If you reveal mistakes in your trading strategy, you can correct it without losing money rapidly until you reach the desired result. And only then open a real money account.
How to open a forex demo account?
On modern currency trading platforms, the process of creating a demo account is very simple and takes no more than a minute. Consider opening demo retail investor accounts in one of the top forex demo — the LiteFinance client profile and on the MetaTrader 4 and MetaTrader 5 trading platforms.
LiteFinance web terminal
1. Open the LiteFinance website and click “Registration” in the upper right corner.
2. When the new window opens, type your e-mail or phone number and your password. By the way, the demo mode in the platform is available without registration. But remember that after you close the page, your trading history will not be saved, so it’s better to register.
3. After completing the registration, you will have personal retail CFD accounts or other account types, and all terminals’ functions will be available on the left panel. Activate the demo trading mode in the upper right corner, go to the “Trading” section in the right vertical menu, open the symbol chart and start training!
If you want to open another Forex demo trading account for practicing, go to the METATRADER tab and click on the “Open Account” button. There you can also select required parameters: leverage, initial deposit and a platform if you are going to trade Forex in one of the MetaTrader’s versions.
Get access to a demo account on an easy-to-use Forex platform without registration
First of all, you need to register your personal retail investor accounts with the provider. Create a demo account and log in to the MetaTrader4 online trading terminal.
Follow these steps:
1. To open your virtual currency account in the MT4 terminal, click on the “File” tab.
2. Select “Connect to trading account” from the menu.
3. The new window will pop up. Enter the details of the opened account and its login.
4. Next, you need to enter your password.
5. Select the server on which your account was created.
6. Click the “Login” button.
To open a demo account on the MetaTrader 5 terminal, first, you need to register in the online broker’s personal retail investor accounts. After that, you need to log in to the platform and enter your retail investor accounts’ details.
1. To open a brokerage demo account in the MT5 terminal, click on the “File” tab.
2. Select “Connect to trading account”.
3. The new window will pop up. Enter the data and login of your demo account on the MT5 server.
4. Enter the password in the next field.
5. Install LiteFinance MT5 server.
6. Click “OK”.
How to top up your demo Forex account
The whole process will take no more than a minute.
LiteFinance web terminal
1. To fund a trading demo account, click on the “Trade” button.
2. Click the “Deposit” button in the lower right corner.
3. In the deposit field, enter the desired amount, for example, 10,000 USD.
4. Click the “Continue” button.
5. Now, on your deposit panel, you can see how the balance has changed from 0 USD to 10,000 USD. Keep in mind that these are virtual money and the profits made on such an account are also virtual.
1. To make a deposit on a demo account in MT4, you do not need to perform any extra steps. You top it up in the same way as your personal account, after which you can use this account in the terminal.
2. The amount will change in the Trading Terminal tab.
1. You can top up your MT5 demo account similarly to MT4 — in the forex broker’s profile.
2. You can see how your balance has changed in the “Trade” tab.
How does a forex trading demo account work?
Now let’s take a closer look at the process of working with a demo account when you trade currencies using the LiteFinance online profile as an example.
1. The main tabs of the account are located on the toolbar. At the top is the “Trade” tab, clicking on which opens a screen with trading instruments.
2. The “Copy” tab allows you to do social trading and copy trades of professional traders in the Social Trading system.
3. The “Analytics” tab contains the best analytical materials – from articles to real-time trading signals.
4. Next comes the “Profile” tab, which we will observe below.
5. The “Finance” tab displays all the transactions in the account – deposit and withdrawal of profits.
6. The “METATRADER” tab is for managing trading accounts.
7. The “Affiliate” tab allows you to manage partner accounts.
9. In the “Trade” tab, you can get access to various complex instruments (note that you can trade CFDs with this provider). The asset classes can be added to the Favorites category.
10. First of all, foreign currencies and currency pairs are presented.
11. Next come the main cryptocurrencies.
12. Then you see the tab with popular metals.
13. Brent and WTI oil trading is available.
14. Shares listed on the NYSE.
15. Shares listed on the NASDAQ.
16. Shares listed on European stock exchanges.
17. The main stock indexes.
Buying and selling
1. When you click on one of the tabs, the trading panel is opened: there you select the currency pair.
2. Here you can see its real price at a given time.
3. Next is the percentage change over some certain period parameter.
4. Next is the indicator of the Forex markets’ participants’ mood regarding the further dynamics of this pair.
5. Next is the Volatility technical indicators.
6. Next is the “Sell” button: when you click on it, you will make a deal to sell.
7. Between the buttons there is a field with the volume of the transaction.
8. The last is the “Buy” button by clicking on which you will make a Buy transaction.
9. In the “Portfolio” tab, which is located in the “Profile” section, you can get information about all active transactions in your trading account.
10. All transactions are presented in the form of a list showing their current status and the information about the opening price, the current price in the market, the set limit orders and the final profit.
11. An important element of the “Profile” tab is the “Trading History” where you can get information about completed transactions.
12. All trades will be listed in the window: you can see their final status, description of the opening and closing prices, set limit orders and the final result in the account currency.
How do I know I’m in the demo account?
Always keep in mind that in addition to the demo account, you will have real money accounts with real money. So, the most important thing is to remember what account types you are using.
How to check out whether you are currently operating a demo account?
1. When you open the terminal, look at the upper menu. Next to the profile photo you will see a “Demo account” colored tab. It is displayed when you are using a demo account.
2. If you click on it, a tab will appear: it allows you to switch your personal account to another mode of operation.
3. After switching the mode, the terminal will switch to the real trading mode. Now transactions will be made on a real account. You can return back to the brokerage demo account by clicking on this button again.
Demo orders placement
1. To start making transactions, you need to click on the currency pair of your choice. By default, the Chart tab will open.
2. In this tab you will see the price chart.
3. To the right is the transaction panel. The first thing to determine is whether you want to trade Forex (foreign exchange) now or under some conditions.
4. The “At the price” tab sets the conditions for opening a trade as a pending order.
5. Below are the buttons for the “Sell” deal type.
6. Next to it is the “Buy” button.
7. Below are the settings of transaction volume for your lots.
8. Next is the panel for setting restrictive orders – Stop Loss and Take Profit.
9. Below is the “Sell” button. If you have selected the “Buy” transaction type, the button will be green, displaying the “Buy” word.
10. Let’s set the parameters of the sell order: Type – “Sell”.
11. Volume: 0.50 lots.
12. Take Profit Level: $30.
13. Stop Loss Level: $20.
14. When placing orders, the fields below are filled in automatically.
15. Finally, click the “Sell” button.
16. When the transaction is completed, the corresponding message will appear in the center of the screen. In the deposit field, changes will be displayed in “Assets used” and “Current change” columns.
17. When you click on the account status field, you will see the tab with current transactions: here is the one we’ve just opened.
If you want to close a trade manually without waiting for the order to be triggerred, you need to click the “Close” button on the trade panel.
Forex Demo and Live Account trading differences
As mentioned earlier, a Forex broker demo account is practically no different from a real trading account. The only difference between these accounts is the availability of real funds. When working with a trading account, you risk real money, which you can lose money when trading CFDs, Forex, etc. but you have the opportunity to earn. On a demo account, you use virtual currency — you do not have high risk of losing money, but you cannot earn anything either.
The screenshot above shows a portfolio of open trades that I made on a demo account, the screenshot below shows the same trades on a real account.
As you can see, there is no difference. You can trade all available complex instruments both on a demo and on a real account. In the screenshots, there is a slight difference in profit and loss, but only because it is almost impossible to open the same transactions at the same time on two accounts.
Why are practice accounts so important for beginners?
Despite the fact that the demo account is not technically different from the real one, the money on it stays like a virtual balance, and in case of a mistake you do not have any high risk.
When you trade on a real account, you are under the psychological pressure of your own money. This is natural for every person, since no one wants to lose money when trading hard-earned capital. When you trade on a demo account, your money is not at stake, so the evaluation of transactions may be different. Therefore, until you develop a clear strategy on a demo, it is not recommended to trade on a real account.
What are the benefits of a forex demo account?
Despite the fact that the money is not real, trading on a demo account itself has many advantages. First of all, a forex demo account eliminates the risk of losing money rapidly. If this significant risk is not present, we have the opportunity to try whatever we want, when we want. The most important thing to do when trading with a demo account is to practice. If you are going through a step-by-step training, then working with a demo account is the best way to practice the skills gained in each lesson.
Just a few years ago, there was no opportunity for new traders to learn from professionals and it was impossible to practice trading skills on a demo account, since this feature did not yet exist. Newbies had to train while accepting the high risk of losing money rapidly, and sometimes it was very painful. Therefore, do not ignore the virtual cash demo account – it is designed to help you.
How to get the most out of your Forex demo account
Now when you know what the best forex demo account looks like, it’s time to explain the best ways to use its features and get maximum knowledge.
Get to know your trading platform
The first and most important thing is to fully understand your broker’s trading platform. This applies not only to the analysis of the main elements and buttons. It is necessary to understand how transactions are made and how their parameters are configured. If you want to test opening and closing trades, better do it without having to take the high risk with real money.
Choose suitable trading instruments
After studying the trading platform and asking for independent advice if necessary, you need to decide on the instruments that you will trade. Firstly, you need to set up trading display windows. While testing the trading tools, you will find that some of them are not available at certain times – trading session is closed. You need to clearly understand the time frame during which a particular financial instrument is traded.
Learn to Control Emotions
We can talk about this point forever, since emotions are the main enemy of both experienced retail traders and beginners. Every forex trader can admit that feelings will always interfere with your activity – you can’t completely eliminate them. For this reason, you should carry out a complete analysis of the transaction before it is made.
Emotions are affecting your decisions only when there is a risk of loss. But until you enter the trade, there is no risk and the market can’t make your investor accounts lose money. When it comes to opening a trade, fully automate it with orders and no longer interfere with the trading process. Don’t even check. When the order is triggered, you will know the result, and if your trading strategy is correct, it will be positive.
Learn risk free trading on demo account
Many large books are devoted to competent risk management, since the very concept of “risk” is very broad. To put it simply, the trading strategy must be chosen in such a way that transactions do not load your deposit by more than 20%. This is the main idea. On the Internet, you can read about using up to 5% of your deposit per deal, but practice shows that it only works for large amounts.
If your deposit is $1,000 and you use only 5% of its value, you will not earn anything. As a rule, the amount of profit on a transaction is equal to the percentage of the deposit load. Hence, with 5% of the deposit, you can open deals worth as low as $50. Obviously, this is not an adequate sum for trading.
In the end, risk management is no longer about numbers, but rather about emotions. Choose the risk/profit ratio at which you feel comfortable. If fluctuations from $20 to $50 scare you, choose the minimum risk parameter. And if a drawdown of $100 or $200 is comfortable for you, feel free to set the risk to 15% or 20%. Once again, a risk free demo account will help you figure out the optimal settings.
To learn more about risk management in trading, read this guide.
Choosing the right leverage
The final result depends on the amount of leverage, because it affects the parameter of the transaction volume. The higher the leverage, the higher the risk that investor accounts lose money. So the leverage must be chosen wisely, without overloading the deposit.
This article explains what leverage is and how it works.
Develop and test your trading strategies
Experienced forex traders use a forex broker demo account as a demo platform for testing trading strategies. When you start experience trading and want to gain trading knowledge, you need a platform to test your ideas, strategies and robots without risk not making your investor accounts lose money. MetaTrader 4 or MetaTrader 5 trading platforms have a built-in free strategy tester where your trading system can be exercised on the real market.
Find your trading style
Another good example of how to use a demo account is to find the right trading style and mindset for you. Decide who you are: a forex trader or an investor? Perhaps you will be both a trader and an investor. LiteFinance has one of the best investment platforms that allows you to do social trading, meaning that you can copy trades of successful traders. You can also test a suitable trader using a demo account.
Transition from a Forex Demo account to Live account
A demo trading account is great, but it is important to remember that you came to the Forex market to earn real money, not virtual cash. To make it happen, you need a real account.
How to switch the mode from demo trading to real trading? Click on the button in the upper right corner of your screen. After switching to live trading, you need to create an account.
1. After enabling real trading, you need to go to the “METATRADER” tab.
2. Open a trading account.
3. You will see a familiar table: fill in the “Account Types”.
4. Select an account type.
5. Choose the amount of leverage.
6. Set the account currency.
7. Click “Open trading account”.
8. After that, the real account will appear in the main window. The balance is zero, so you will need to add funds.
1. Deposits and withdrawal of profits from the account are performed in the “Finance” tab.
2. Select the “Deposit” tab.
3. Choose a convenient method of making a deposit. There are many ways, from WebMoney to regular bank transfers.
4. Next, select the real account that you want to replenish.
5. Specify the currency.
6. Enter the amount you want to receive into your account.
7. If you have a promo code, check the box, if not, skip it.
8. At the end, click the “Continue” button.
9. You will be readdressed to the processing tab: carefully check all the fields. Please note that the transfer fee is compensated by LiteFinance, and you will receive exactly the same amount that you indicated on your account.
10. If a mistake is made somewhere, the data can be edited.
11. Now that you made sure that everything is correct, click “Confirm”. After that, the transfer will go to your trading account. Usually, this happens very quickly – the money comes within a minute.
That’s all. You are ready to make money. Good luck!
If you need professional help in trading on a live account, consider copy trading (or automated trading). This feature allows you to duplicate transactions made by profitable traders – they can be automatically performed in your terminal. With copy automated trading, you don’t need to learn how to trade on your own.
Average monthly profit
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Make profits from the first day of trading without training. The best traders from the whole world gathered on the same platform to share their money-making strategies.
What Demo trading accounts can you find on LiteFinance?
LiteFinance can offer demo trading accounts: its own LiteFinance platform account, MT4 DEMO CLASSIC, and the relatively new MT4 DEMO ECN. These accounts are also supported by the MT5 trading platform. In addition, a demo mode is available: it allows beginners to get acquainted with the functionality of the terminal without registration. The company also offers several demo forex accounts for trading.
Free Forex demo account without time limit
If you compare trading on the best forex demo accounts on the Forex market and on the stock exchange (for example, the London stock exchange), the key difference is that Forex demo accounts are usually provided for an unlimited time. In the stock market, a demo account is available for a month or a week, depending on the conditions of the online brokers. LiteFinance is one of the best forex brokers that has a free demo account with no time limit.
Forex demo ECN
The best demo trading account for Forex trading is almost the same as a real account. The ECN demo is the best choice for any trader who is getting ready to start trading and earn. After all, the ECN demo is located on the same ECN server as the real accounts. So the difference will be only in the money that is virtual balance on the demo account – currency or stock trading or trading with other financial instruments will be identical with the use of similar trading tools.
Forex robot demo & indicators
Best demo accounts support all types of indicators – both your own, which you can download directly to the platform, and those built into MT.
The screenshot above shows how many built-in indicators the trading platform contains in the online account.
Monthly Forex demo contest
LiteFinance also holds a monthly free contest on demo accounts. It starts every calendar month and all participants need to do is open deals. At the end of the month, the 5 participants who showed the best result and followed the risk management rules will share the prize pool of $10,000 (real money).
Anyone with an online demo account with LiteFinance can register and take part in the contest.
Forex gold trading demo
We want to make a special mention of the opportunity to trade metals such as gold, silver, platinum and palladium on a demo account.
Stock demo trading
On your demo account, you can also trade shares of the largest global companies in the world. The ECN demo account allows you to trade stocks of the NYSE, NASDAQ stock exchanges, as well as some European stocks.
How to delete your Forex demo account
There are two ways to delete your demo account: in your broker’s personal account, or through the support service.
But we don’t see the point in doing it. The demo account does not burden you in any way, you can always return to it for testing new strategies. If you have lost the entire virtual deposit, you can top up the balance by clicking the “Deposit” button.
Working with a demo account is a great opportunity to practice before you start trading on a real account.
The main advantages of using a demo fx account are:
Learning the principles of trading on the stock exchange.
Studying the elements of the trading terminal.
Making transactions without the risk of losing capital.
Trading strategy testing.
Testing of trading robots and other automatic telephone exchanges.
Access to the rate of real quotes without a trading account.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.