September 20, 2021

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Which is the Best Forex Demo Trading Account in 2020?

11 min read

A demo account is essential for many traders before they start trading or switch from fake to real trading. Especially for beginners, the question is, which is the best trading demo account. We have provided information to help you find a good trading demo account. Of course, we not only give you useful tips, but also present you with a small selection of demo accounts, which we consider suitable.

It is almost mandatory for beginners to gain experience in a trading demo account before investing real money. A demo account is ideal for getting started because it allows you to get a taste of trading without risk. Many interested parties like to deal with technical analysis or are interested in news-trading and read a lot. However, trading often turns out quite differently than what they initially think.

Beginners very often commit many rookie mistakes. Every trader had to pay apprenticeship fees, especially those who are now successful. A demo account helps to better understand the trading and to find if the interest and the fun are actually equally great.
A trading demo account prevents a beginner from unnecessarily risking their money; these people start trading without ever having prior experience.

Even for advanced players, a trading demo account can provide experiences that can be very valuable. On the one hand, such a demo account of course makes it possible to deal extensively with a provider and to get to know its offer as accurately as possible. Whether an online broker is a good companion is often very easy to find out using the trading demo account. Traders get a much better idea of their strengths and weaknesses.

On the other hand, it can never hurt to check the success of your strategy and maybe even try something new. Many traders only have the freedom to actually develop themselves in a demo account. With your own money, nobody usually wants to test new strategies or make big changes. Too big is the risk!

Another important factor can be the different trading platforms. If a trader wants to change the online broker, it is sometimes possible to change the trading software as well. Although there are only a handful of different trading platforms, especially in the area of private traders, they have many differences and functions. However, many users are aware of the problem that they have become accustomed to trading software and no longer dare to change their trading platform. A demo account makes it easy to try out different trading software and get to know the differences.
Even for advanced users, it can still be very useful to gain experience via trading in a demo account.

According to our trading demo account trading experience, the differences in trading accounts can be huge. There is usually a big difference in terms and conditions. Most online brokers limit the demo either in time. For example, periods between three and six weeks are usual. Still others charge the demo account only once with play money. If the customer has used up this credit, he can no longer use the demo account.

Another difference is the quality of the demo account and the similarity to the actual trading conditions and functions. Here, ECN brokers are often faced with special challenges. ECN trading cannot be completely simulated. This is because trades always affect the market, especially when dealing with large volume trading. In addition, the market often reacts differently and even less rationally than a broker, who can intervene as a market maker in the price delivery system. Because of this, ECN demo accounts are often a little further away from the real conditions of the broker if compared to a retail broker. Your demo account is more like one provided by a market maker, which is technically difficult to avoid.

So it is not surprising that many providers do not offer real-time prices in the demo account, but let them run time-shifted. Of course, this can mean that investors cannot meaningfully test certain strategies. Providing real-time prices are quite expensive for brokers!

Another difference often affects the entry requirements for a demo account. Here, the differences are often clear. While some brokers do not even require a valid e-mail address, others want the complete contact details including address and mobile number. Still, others offer a demo account only if the investor makes a deposit [invests real money.]
Thus, demo accounts differ in terms of time and capital constraints, similarity to actual real money trading and access requirements.

Which features are important?
There are many trading demo accounts, but only a few really good ones. A good demo account should:
Not require too much personal data
Be as close as possible to real money trading
Be rechargeable
Has as few restrictions as possible

The broker that gets to wear the title “Best Trading Demo Account,” should combine these features. For one, traders can test the broker in a way that is meaningful. On the other hand, they can gain enough experience with trading. The most important thing is that the conditions are as close as possible to the conditions of real trading. Only then can brokers and traders get to know each other well.

Essential is also the possibility to recharge the play money. This is the only way in which newcomers can also test the great impact that differences in money management can have and also test for risky or conservative parameters/strategies. The learning effect here is significantly higher than it could ever be in theory. Even experienced traders could benefit from this. After all, they often do not have the chance to take more risk with real money just to find out if it’s a proven remedy in a given situation. With a rechargeable demo account, even advanced users do not have to worry about anything and can take full risks if they find it useful or just do not want to hold back.

The best trading demo account provider can only be awarded to a broker who survives our tough quality check and prevails against the other providers.

How transferable are trading demo account strategies to real trading account?
Beginners who have gained experience and have a strategy in a trading demo account cannot always transfer the trading strategy 1:1 to real trading. There are usually some differences in accounts that can affect the trading strategy.

The most important difference/factor concerns the psyche of the trader. Real trading is simply something completely different, whether a trader risks 10,000 dollars or just 10 dollars. On the other hand, trading with play money 10,000 dollars or even more, usually does not cause physiological effects. A demo account is well suited to test strategies and to get a glimpse into how good your own nerves are. However, trading one’s own money is a whole different ball game. Traders react in a different way and, above all, more in a more extreme way compared to a demo account. Traders can make good use of the serenity of the demo account and emotional control is very important for trading success. However, their trading demo account experience is usually not even remotely comparable to their real money trading sensibilities. Beginners must pay attention to this in every case and should be more careful at the beginning with the amount of invested capital.

Another point that often cannot be adequately mapped in the demo account is the speed of order execution. In a demo account, the order is usually always executed directly/instantly. It is not simulated that a broker must first find other trading partners who accept his terms and the order is first forwarded to the market. That is why traders, who were previously only able to gain experience in demo accounts, often underestimate slippage. It arises when the trader does not receive the desired execution price and the actual execution price deviates from it. Especially large orders that come onto the market are regarded as high volatility to the causers. There are several types of orders that can reduce slippage, but there are often insufficient incentives for newcomers to a demo account to use them. On the open market, traders often experience unnecessary setbacks because they do not know how to circumvent this problem.

Beginners should also make sure that online brokers are basically interested in making potential new customers positive trading demo account experience. Those who are looking for a demo account should be careful to choose a reputable online broker for trading. In the past, reports from dubious providers have repeatedly appeared, which made the trading experience in the demo account much more positive, in order to persuade beginners to make a deposit.

Traders who have only gained experience in trading demo account can still underestimate the difficulties of real money trading. It is important to know the difference and to be prepared for the changes.

Are demo accounts always free?
Demo accounts are almost always free. Only very rarely are they tied to financial terms. However, it can happen that a broker requests the opening of a real money account and a deposit in order to make the demo account available as well. However, these offers are extremely rare according to our trading demo account experience.

However, potential buyers should not forget that they usually have to provide their data in order to use a demo account. In addition, they often have to agree to be contacted for promotional purposes. Therefore, a demo account is not completely free, but investors pay for the service at least with their data.
Most demo accounts are completely free of charge, but customers often have to provide a lot of personal information and contact details.

Why do brokers offer demo accounts?
The purpose of demo accounts is usually the advertising purpose. The online broker allows interested parties to test their services in detail and get to know it better. Some providers understand a trading demo account primarily as a service for customers, but usually it is the idea of the offer that is in the foreground. So it’s all about marketing.

The provision of such a trading demo account is of course not free for the online broker. Each user causes traffic through the data movement, which is still expensive today. In addition, demo users of course contact the support and take advantage of the service and free services. It is therefore associated with online broker with effort to offer a demo account. It is also difficult for the providers that interested parties always refer the trading demo account experience to the online broker. If the demo account cannot keep up with the expectations, the interested parties will turn away and use another demo account. By contrast, if the broker meets the trader’s requirements, the good trading demo account could gain a new customer for the provider.

Another purpose is, of course, to establish contact with potential interested parties. According to our trading demo account providers review, most vendors will ask for the demo account at least an email address and also get the consent that they may inform the user about their service. In this way, they may not convince traders directly to use their own offer, but remain present to the potential new customer.
Online brokers benefit from demo accounts, although of course they also cause additional costs. However, the marketing effect is not to be underestimated.

Training material additional to a demo account
[Especially] Beginners should never underestimate the possibility of theoretically acquiring knowledge about training materials and practical application in the trading demo account. Many beginners are quickly overwhelmed with studying material, because the practical trading is much more interesting.
In contrast, a demo account directly offers the opportunity to learn and trade at the same time. This makes learning easier and content easier to remember.

Beginners should not only consider the materials offered by the broker, but to also look for other information available online. The info provided by an average broker is usually not quite sufficient to enable successful trading over a longer period of time. It often makes sense to consult independent sources as well. In this way, their knowledge will become more comprehensive and from different perspectives. Different didactic approaches are often useful.

Beginners who use training material and at the same time take a theoretical course often have a much greater learning effect.

First steps – what should beginners start with?
No matter if it’s the best trading demo account or one of the less good offers, many beginners are overwhelmed by the numerous possibilities at the beginning and do not even know how they could make good use of a demo account.

First, it is important to get an overview. Beginners should find what their underlying assets are and how they can access them. The account functions have to be found in order to create a basis. In the next step, traders should try out whether they can place an order and also understand the different order types.

Traders have to deal with the different indicators and presentation options. They lay the foundations for successful chart analysis and are therefore an indispensable component of most traders. Beginners should focus not only on how the individual indicators presented to them by default, but also on what exactly they indicate or how they work.

The further procedure also depends on which restrictions the online broker has planned for the demo account. In many cases, it does not make sense to get rid of it directly. Beginners should already have dealt with money management and can use this directly at best. However, this looks different if the demo account can be easily recharged. Here, traders can get to know all the important features and make a few orders regardless of losses, while they look at everything in peace. If the money is lost, we simply recharged the demo account and then continue with a meaningful risk management.

How much demo account trading is necessary?
Many newcomers wonder how long they should gain experience in a trading demo account before investing real money. A simple answer is unfortunately not possible. Basically, the trader should feel comfortable with trading and have developed a sense of which indicators he can work well with and which lead to success. Accordingly, he should act successfully overall. A trader should also know how a number of loss traits feel like and how he reacts in such cases. If everything in the demo account has worked well in short-term and the trader didn’t get to see loses, that is almost a sure sign that he does not know all the pitfalls of trading.

Many newcomers usually focus on using the demo account after the period in which they were able to use the demo account. However, it often makes sense to test at least two demo accounts over the full time. On the one hand, traders can learn so much more without taking a risk, on the other hand, a newcomer, of course, only compares what areas an online broker is good at and vice versa.

Not only beginners, but also advanced users benefit from a trading demo account. Both audiences should, however, pay attention to the quality of the demo account and only register with providers who can also offer as much similarity as possible to real money trading.

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