Before choosing a broker with whom to invest in derivatives or investment products, it is best to be sure that the broker's online trading technology is suitable before investing capital. Fortunately, it is possible to use a free demo account or a trading simulator that replicates the investment in real conditions on the proposed platform but with fictitious capital.
Of course, the main purpose of this type of demo account is also to allow you to practice and test different strategies and different types of analysis. You only need to test these different strategies to determine which ones have the most positive effects before you start trading for real by accessing your traditional trading account.
The demo accounts with unlimited fictitious capital are probably the most interesting because they allow you to trade in demo mode for many weeks without being limited if you lose your entire training capital.
Finally, demo accounts also have the advantage of helping you determine whether or not you are suited for trading by verifying that you are able to make good trades.
As you will have understood, the main purpose of a Forex demo account is to allow you to test a broker's trading platform in order to verify that its features match your investment method. But these accounts also allow you to test all the services and tools of this broker without spending a single cent.
It is also very interesting, if not essential, to open several demo accounts with different brokers in order to be able to compare the different technical characteristics of each of these solutions. In this way, you will be sure of your choice and will be able to launch yourself with confidence.
But demo accounts also have another important advantage, as they allow you to test your trading strategies without risk and only start trading when you have developed a method that you are happy with.
In order to make an accurate comparison between the different demo accounts offered by CFD brokers, you will need to evaluate a number of important criteria, the main ones being
A free demo account offered by a broker or a trading platform has certain advantages that we propose to discover here in detail. We will then come back to the limitations of this tool and give you our objective opinion on its usefulness.
As far as the advantages of such a demo account are concerned, we can first of all underline that it allows to visualize the way prices of an asset evolve and that it allows of course to learn to recognize the risks and in particular the risk related to the leverage effect. Indeed, leverage is a tool that many new online traders are eager to use but which fundamentally changes the level of risk involved. However, it is possible to choose the level of leverage you want to use in your strategies and assets. Using a demo account allows you to test different levels of leverage in order to be able to choose the most suitable leverage later on. A demo account will indeed allow you to understand that leverage can be both useful and dangerous.
Another undeniable advantage of the online demo account is that it allows you to understand how the proposed trading platform works and what trading conditions are offered by your broker. By using your demo account you will learn how to use different orders to place, how to customize the charts by displaying different indicators or using different time periods. They allow you to test the different technical or fundamental analysis tools or to test specific functions such as social trading or how to best manage different lot sizes. Of course, it is sometimes possible to use the demo accounts of different brokers before choosing the broker whose platform will convince you the most.
Finally, and this is of course the main advantage of an online demo account, it allows you to test different trading strategies. Indeed, the trading platforms offered by CFD brokers offer different ways of approaching the market and some even include tools dedicated to the strategy. With your demo account, you will be able to test these tools as well as test your own strategies in real market conditions. You will be able to try out different approaches in order to evaluate which one seems to be the most suitable for the type of asset you are investing in and thus be ready when you start trading by yourself.
As we have just seen, a demo account has many advantages but it also has its limits which we propose to discover now in more details. These limitations are as follows.
In conclusion of this article, our opinion on using a free demo account for your online trading remains relatively positive.
In fact, using such an account allows you to practice without worrying about getting into real trading without understanding the ins and outs of it. In fact, we would strongly advise anyone who wants to start trading CFDs to use a practice account to familiarize themselves with the trading platform that they will be using in the future.
But as we said above, these demo accounts also have their limits and you shouldn't go into real mode without realizing that things will be different in that your emotions will likely change your behavior in the market.
In conclusion, a demo account is very useful for all traders who want to test their knowledge and strategies before starting trading.
A demo account is a form of trading account that allows investors to try their hand at online investing with a fictitious software. This software is usually based on the real market prices of the assets as well as all the features and tools of the brokers and thus allows investors to practise placing orders and using the platform with fictitious money but in real conditions.
Unlike a demo account, a real trading account is a real online investment account. It is where the investor deposits the capital with which he will place his orders on the market. The trading account allows the investor to bet part of his capital on online operations. It is funded by the trader and by the gains made and losses are deducted from this account.
Opening an online demo account is done in the same way as for a real trading account. You need to fill in a form to register with the broker of your choice and fill in your personal details. You will then get a fictitious capital with which to trade and, when you are ready, you can switch to a real trading mode by switching to a standard account.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail CFD accounts lose money. You should consider whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
