Demo Account - Practice Account - Demo MT4 Account
Before beginner traders can start trading the real market, a beginner trader should look for a trading practice account which is oftenly known as a demo account. This trading demo account practice account is provided for free by brokers and therefore also referred to as free demo account - Demo MT4 Practice Account.
This free demo account for beginners is provided to beginner traders for the purpose of practicing their strategies & forex techniques as they learn how to trade the online trading market. This free demo account for beginners also allows the beginner traders to practice on the trading platform software that they will be using for online trading that is known as MT4 platform until they become familiar with its operation, as well as the execution of trades using this MT4 software and how to navigate the MT4 platform and the charts that are within the MetaTrader 4 platform.
Demo MT4 Account Practice Account - To start learning using trading demo online practice accounts, beginner traders need to start with a demo account, these trading demo accounts are similar to the real accounts in terms of the actual software as well as execution conditions of orders, the only difference is that for a trading demo account - a trader does not need to deposit any money when it comes to the practice account. The money used in the trading for novice traders demo account is virtual currency, and it is not real money: trading for beginner traders practice trading account is used to simulate real money trading without risking money.
Online Demo Practice Account - Learn Software with a Free Demo Account
The trading demo account will have a virtual balance of $5,000 or $10,000 or $50,000 or $100,000 & a demo trader can choose the amount of capital they want to practice trade with. The trading demo account example shown above the virtual balance of $100, 000 as shown above on the MT4 Transaction Window and a beginner trader can use this $100,000 virtual balance for forex currency practice trading - Demo MT4 Account Practice Account.
Remember the trading Practice account is a free account and because learning might take some time, trading brokers provide this as a way for beginner traders to study Forex trading and start without depositing real money.
Beginner traders should also look for an unlimited time practice account to ensure that they get enough practice time until they are ready to invest in the live market.
The main purpose of this demo account is to allow to beginners access the real market as other traders participating in the online market with real money, only that the difference is that the funds used in a trading demo account are virtual funds that are risk free, but everything else, from the software, trade order execution, spreads and forex currency price movement are the same as of those traders transacting the live market.
As Forex popularity grows and more financial instruments are introduced to be traded alongside forex currency pairs, these demo accounts can also be used to practice online trading on these new added financial instruments.
Commodities: GOLD and SILVER
Futures: CORN, WHEAT, SBAN
Energies: NGAS, OIL
Stock Indices: DOW, NSDQ, SP, NK,DAX, FTSE, SMI, ESX50 and CAC
The financial instruments that are also gaining popularity in the online spot trading market, can now also be traded on the online trading demo account practice account - Demo MT4 Practice Account. These financial instruments are popular because they are used to hedge currencies trades as well as provide additional financial instruments that can be traded online so as to diversify the portfolio of investors and online traders. These financial instruments are traded like this; when there is not enough liquidity or volatility in market then investors and online traders look for this liquidity and volatility in these alternative financial instruments. The popularity of these financial instruments also means that these financial instruments have also developed trends that can be analyzed just like the trends found in currency pair charts.
This type of demo account is meant to serve the following purposes in forex:
Learn Software - Demo Platform Training
The first thing that a demo account is supposed to do or is supposed to be used for is to study the ins and out of the trading software that your broker uses, a good example of a trading software is MT4 platform. Once you register for a demo practice account with a broker & download their software, you'll need to train on how to trade forex currencies using the trading platform you have downloaded. Learning to operate this trading software is especially crucial for beginners with zero knowledge of the trading market. If a beginner trader were to start directly investing with real money without knowing the working of a platform they can easily make a mistake by pressing the wrong button or placing the wrong trade order by mistake without even knowing.
Learn Order Execution and Setting Trade Orders
New Traders will not know the difference between a limit order and a stop order, new traders will also not know when to buy or sell or which currency to buy and which currency to sell especially considering the fact that forex currencies are transacted in pairs and buying of one currency is also the simultaneous selling of another, a concept that can confuse a beginner trader, therefore, the need to start with a demo practice account until the time that they get to know which currency to buy and which to sell and when to buy and when to sell.
Test Your System & Strategies
A demo practice account is a perfect ground for testing your system & strategies, As a beginner trader the first thing you need to have before you start trading online is a system that's based on Forex strategies. After coming up with your system you will use this trading for novice traders demo account to back test your system or what was anciently known as paper trading, this trading demo account trading is similar to the paper method only that it doesn't use pen & paper but the technique of back testing is what is similar to that of paper method.
Until the time you start winning more on your practice trades only then - you can then consider to invest in your real account. Starting with $1,000 or more is recommended, it is best to save your money upto at least $1,000 dollars that way you have a fair chance of succeeding as you will not make the number 1 mistake in Forex: under capitalization. In fact the more well capitalized your account is the better, you can begin with $5,000 dollars, $20,000 or $50,000 - just make sure you've enough capital to start trading with.
Ask yourself why most free practice accounts are set at account balances of $10,000 or $50,000 because the more well capitalized a account is the better the chances to succeed, because these accounts will not be undercapitalized.
Trading Practice
This trading demo account - free practice account is a type of account offered by online brokers as a way to introduce beginner traders to their software platform and methods of orders execution. This where you practice until the time you can make profits on this practice account & then afterwards you can trade the live market.
The free demo account for beginners is a great way to get started and learn the specifics of online trading with no risk of losing money & at the same time get to know the execution methods of orders and test various strategies for free.
Using a trading for beginner traders demo practice account is the best way to gain knowledge on how the market works and to help you in the understanding of the actual trading process. A good software platform to use for opening a practice account & trade with is the MetaTrader 4 platform which is simple to learn - the learn MT4 tutorial section which also includes the how to use MT4 demo account tutorial is also provided here on this Learn Trading Website, under the right navigation menu you might want to read the how to use MetaTrader 4 tutorial before opening a software.
By using trading demo accounts, a beginner trader has the opportunity to learn executing trade transactions without risking their own money. The broker will set up a practice trading account for you for free so that you can test their software, their execution - execution is considered by most investors and traders as an important aspect when it comes to choosing a broker, No Re-quotes Execution Policy is the best execution method of orders, many order requotes will mean sometimes investors not getting their orders executed, or if the orders are filled/executed they will be executed at a price that is not better than the one previously quoted plus the fact most online traders just hate being requoted. Imagine trying to place a order instead of the order getting executed instantly you get requoted, then you have to put another confirmation order, if you get requoted 5 times you will have to place 5 other confirmation orders, plus the original order. A No-Requotes Policy for order execution is the best option to select from.
There are many advantages of using an online practice account, the biggest advantage is having the time to figure out how each trading platform works, how to navigate the software and know what each function does. On top of that you can use the online trading demo account to test your strategies to see if they work before switching to the real market.
Many beginner traders find that by putting the knowledge on this learn trading site to work on a free practice account, they get a clearer understanding of what to look for before, during and after each trade transaction. These learn trading topics are aimed to teach every aspect of online trading, most beginners just learn about; a Forex system, how to generate trading signals and then begin investing on the real market, well it takes them less than a month to lose their invested capital. After all these beginner traders did not study about forex money management topics under key concepts tutorials, neither did they read about forex draw-down and maximum draw-down, and the best of them all LEVERAGE. If you have no idea what leverage is don't open a live trading account until you do.
Even the experienced investors and traders will also test the demo accounts of other online trading brokers, especially if they want to change their broker. This is done so as to help them get to know more about the execution of the new broker and also study the new trading software of the new trading broker. Nowadays most traders just learn one software, the MT4 platform, which is provided for download by all brokers for free so when a trader moves from one broker to another they will still use the same trading software without the need of learning a new software all over again.
The purpose of the trading demo account is to familiarize the beginner trader with the various methods of analyzing chart price movements and orders execution - it provides beginner traders with examples of how the market works without the risk of losing cash. A beginner trader can also learn how to execute orders and how to analyze forex currency pairs and when and how to open a trade transaction, how to read a forex currency quote, how to navigate price charts so that they master the various platform transactions before progressing to trade the live market.
Looking at the chart below a beginner trader would not know how to trade or execute a trade transaction if they were to start trading immediately. A beginner trader would almost certainly lose their money because they will not know what they will be doing or which button to press. This is why all beginner traders start with a demo account provided for by their broker for free so as to practice on the platform software risk free using a practice online trading demo account before opening a live account.
Practice Account - Learn Charts using a Practice Practice Account
Learning the broker’s software
Because different types of online trading platforms are provided to investors like the ones listed on this page; all brokers will have demonstration accounts with which a beginner trader can use to learn the new trading platform & about the various trading tools provided by the broker on the software.
Web Based Software - Traders can Learn this Trading Software with a Practice Free Demo Account
Looking at the above examples - a trader would require to familiarize themselves this new trading software afresh before beginning to use this new platform - a trader would then open a demo account & use it to learn the new trading platform.