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It allows traders to familiarize themselves with tools and features provided in different trading platforms without placing actual deals and funding them of course.
Trades in the demo account are not subject to dividends adjustment or price movements.
A demo trading account is free for the trader to place hypothetical trades and there will never be any rejection of prices, or will any trades be closed due to margin calls, during this trial period.
A demo trading account works by simulating trades with virtual funds. Forex traders offer free demo trading accounts to test if platforms suit the needs of trading before venturing into the real trading environment. So no funds are at risk during this familiarisation period
A demo trading account [1] provides an entry point for forex market. It provides a platform to trade CFDs, forex and stock indices.
Some of the Demo Trading accounts running in UK platforms include;
a) ETX MT4 Demo
This provides Expert Advisors to help in automated Forex Trading. It also has multiple charts to make trading easier.
b) Binary Demo
This demo account offers benefits such as trade in 60 days providing more time. It also offers up to 100 % fixed payouts.
c) TraderPro Demo
This demo trading account provides a wide range of markets to trade on. It provides customizable charts to execute trade easily.
Advantages of Demo Trading Account
1. It is risk free
Demo trading accounts are quick and do not involve any risks since it uses virtual funds. It is used to test if the trading platform meet needs of forex Etx traders prior to opening a live account under the same platform. It lays a foundation for successful trading.
2. It acts as an introduction
A demo trading account introduces forex Etx traders to the practical world of money without exposure to losing it. A demo provides tests and trading strategies that work best for trading. These tests act as control experiments to predict the outcome of using a particular trading strategy.
3. Provides knowledge on the trading environment
A demo trading account contains features, functions and keys used by a certain platform in the trading process. It also provides indicators and trading analytical systems that are found in the real environment of trade. It contains charts for forex Etx traders to practice trading on the charts before venturing into live accounts.
4. Provides exposure
A demo trading account contains educational content to pass knowledge on basics of trading and pricing on markets including shares, contract for differences, exchange traded funds and indices. News and research are provided on demo trading accounts to teach on live markets.
5. Reliable and fast Execution
Demo trading accounts ensure that trades are executed with no rejections making it a fast and reliable process. Such accounts in the LCG trader platform of the UK provides reliable trading experiences for traders.
6. Provision of trading videos
Demo Trading accounts provide trading videos to help in analyzing regular markets. Traders learn more through observing analysis provided from trading videos.
7. Testing performance
Demo trading accounts help test performance of a trading plan by use of virtual trading therefore gauging effectiveness of a certain platform.
Differences between a demo account and a live account
A demo account may differ from a live account in terms of differing margins and leverage settings. These changes may be caused by elevated market volatility making the two accounts slightly different in the way they operate but the demo account offers you a very real trading experience.
Using a live account and trading with real money at risk in a real trading environment, is a highly positive experience, as opposed to demo account trading, where no real money is used, and the trading experience can create a lack of emotional commitment.
Demo trading accounts do not completely evaluate risks and can pose a temptation to overtrade as there are no actual financial penalties for doing so. Overlooking such risks with a demo trading account, even though you will not suffer losses for doing so, may affect your trading decisions when you eventually commence trading with a live account.