If you are a new/beginner trader or even an intermediate trader. It would be in your best interest to utilize all the tools given to you by your broker. Specifically, the use of a Demo Trading Account.
What is a Demo Trading Account?
A demo trading account is a simulated market environment offered by a financial service provider to help you familiarize yourself with the actual trading experience. By providing a realistic simulation of the trading process, demo accounts allow you to test different products and markets without incurring any financial losses, giving you the freedom to experiment and gain confidence in your trading skills.
Most brokers nowadays offer a free Demo account upon registration, with a balance generally ranging from $10,000 to $100,000. It is all paper money, so you will not be making any “real” profits, but it also does mean that you will not suffer any losses.
A Demo account is the training ground for new traders to dip their feet into the financial markets. It is a testing area for traders to experiment with various trading strategies and study the trading platform provided. Intermediate traders can utilize demo accounts to survey the trading platform and develop an efficient trading strategy. New and Beginner traders will, most likely, spend their time losing money but will be gaining valuable experience and knowledge of how the market functions.
Demo accounts allow traders to learn about the live markets and the trading mechanisms without the risk of losing their money.
How to successfully trade using a Demo Account
Many individuals blow multiple demo accounts in trying to find the perfect trading strategy, which is fine as that is what Demo accounts are for, however, simply blowing demo accounts with random trades, not learning anything meaningful is a waste of time.
Stick to the following principles when trading with a demo account and you will be quickly on your way to a profitable live account.
- Treat it like real money
- Stick to one strategy at a time
- Stick to one or two currency pairs
- Keep a record/journal of your trading journey
Treat it like real money. A lot of new traders become complacent as they are aware that the demo account is paper money. This complacency causes them to take impulsive trades, not follow their strategy and not practice proper risk management.
Stick to one strategy at a time. Inexperienced traders look for the “perfect strategy” and as soon as a strategy falls out, it is thrown out the window. Beginner traders should choose a trading strategy and work with it for about a month to see if it fits their trading style, and learn the pros and cons of the strategy. This will help develop their knowledge base so that they can develop a methodical strategy of their own.
Stick to one or two currency pairs. It is advised that beginner traders should only look to analyze one or two currency pairs. Ideally, you would be trading Major FX pairs due to their high liquidity, there will be plenty of “moves” for studying.
Keep a record/journal of your trading journey. Your win trades, lost trades, the strategy used, currency pair, time of day traded etc. Keeping a record of your trades helps backtrack your performance and identify patterns within your trading style.
Whilst trading on a demo account it is best to explore many different trading styles, whether it be scalping, swing trading, FX, Indices, night-time, daytime etc. Demo accounts exist, so that traders can explore new possibilities and refine their trading strategy.
Develop your CFD trading skills With ZERO Markets’ Demo Trading Account:
- Web and mobile trading support
- Trade with precision, live buy & sell prices
- Practice trading with $10,000/ $20,000/ $50,000/ $100,000 of virtual money
- Trade online, 24 hours a day, 5 days a week
- Test strategies on the go with MT4/5
Once you have sufficiently explored the platform and indulged yourself with all the available indicators, objects, and symbols it is finally time to move on to a live account.
It is important to note that although the demo platform replicates many of the features of the live platform, there are some distinct differences to be aware of, including but not limited to:
- Trades made through the demo account will not be subject to interest and dividend adjustments
- Trades made through the demo account will not result in the closing of positions due to insufficient funds to cover margin and running losses, as can occur in a live trading environment
This is not a comprehensive list. Before you start trading with real money, it is important to familiarize yourself with the fees, risks, and other important details of trading such as account types. This can be done by reading relevant materials such as:
Transit to a Live Trading Account
It is highly recommended that, if you are just starting out, you start with a small account anywhere from $100 to $1000 dollar account. This way you only risk losing a small amount of money if you are unable to keep your cool like you did with the demo account. After being successful in transitioning to the live account where you:
- Execute your desired Strategy.
- Utilize proper lot sizing and risk management.
- Do not get emotionally unstable.
You can start increasing your capital and increasing your potential profits.
Trading on a live account with real money will feel very different from trading on a demo account. You may not see the same results as you did on the demo account. You become more anxious and nervous seeing your open positions in the red. This is why it is even more important that you SLOWLY move to invest more of your money into your live account.
Trading is not mindless gambling, though it can become gambling for certain individuals.
Trading is an intricate system where you can use probability to increase your odds of winning and management to minimize the losses and maximize the profits.
How long does a demo account last?
You can get unlimited trial time to practice trading strategies from Demo accounts of ZERO Markets MT4/5 platforms, you will need to login to your demo account to keep it active.
Will my account be archived if I don’t login?
Please be mindful that the demo accounts are also subject to archive rules of login inactivity, meaning the demo account will be archived automatically if no platform login is detected for consecutive of days. By default, 60 days rule applies for MT4 Demo accounts, and 30 days for MT5 demo accounts.
Post archival, you will not be able to log in using the demo account credentials. This archive strategy is formulated to provide all levels of demo account traders to experience the live markets with our superior execution and reliability on web and mobile.
Contact our support to find out more details if you have Demo accounts with open trades.
Can I renew my demo account if it’s archived?
Unfortunately, at this time, archived demo accounts cannot be renewed.
What do I need to provide to open a Demo Trading Account with ZERO Markets?
To activate your demo account, you’ll need to supply at least a valid email address to register a client portal account, the registration is very straightforward. Check a quick video here:
In the secure client portal area, you’ll be given immediate access to demo account creation, along with a pre-set balance chosen. The client portal is also the place to manage all your demo and live trading accounts. You can also reach out to our support team for extra trading account management, such as upgrading a demo account to a live account.
What distinguishes a demo trading account from a trading simulator and a paper trading account?
There is no difference between a demo trading account, trading simulator, or paper trading account. The terms “demo trading account”, “trading simulator”, and “paper trading account” are interchangeable and refer to the same type of virtual trading platform.