Opening a demo account

Inexperienced traders generally start trading with a demo account, since it allows you to gain a basic knowledge of the market, familiarize yourself with the MetaTrader 4 terminal and try to earn money risk-free. However, everything you earn will be ‘virtual’. Hence, once you have gained an understanding of the market and are familiarized sufficiently with the trading system, you can try trading with a real account in mini lots. Trading in mini lots will significantly lower your risks and, at the same time, will help you to understand the process with ‘real’ money. If you have no experience with the terminal, and you are not familiar enough with the way transactions are made and the way profit is formed, it is strongly recommended that you trade with a demo account first. Please remember that trading in financial markets always involves an element of risk.

Open a demo account 

If you used correct contact information to open your demo account, the account will be valid as long as you execute at least one transaction within 60 days. If there has not been any activity in your account for 60 or more days, it will be suspended. You can top up your demo account with as much virtual funds and as many times as you like. Demo account is absolutely risk-free environment, where you can both learn the ropes of Forex trading if you are a newbie and try out a new strategy if you are a salted trader.

Introduction to demo accounts

We strongly recommend that you read the following information on the advantages and drawbacks of demo trading.

Demo accounts are often used by inexperienced traders who want to try demo trades before progressing to real ones. Although demo trading gives the uninitiated trader a certain amount of invaluable experience and insight into the trading process, one should bear in mind that the obvious and major drawback to demo trading is that it does not allow you to fully appreciate trading on a real account.

The first major difference is a technical distinction: Trade servers are constantly supervised by an experienced team of professionals who ensure uninterrupted operation of servers and the software.

The second distinction of demo trading is the psychological aspect: you trade in virtual funds. Being aware of this fact, there is a tendency to treat demo trading less seriously, while sales in financial markets demand a great amount of concentration and knowledge. This does not mean that trading on a real account is necessarily difficult. However, a cautious approach is strongly recommended. Some aspects of human psychology may hinder earnings potential when trading in real assets is initially undertaken. Hence it is advisable to start with mini lots and small amounts but with real money on real trading account.

Another important distinguishing feature of demo trades is the speed with which a position is opened. With a demo account, everything happens quickly, and always at a price stated by you. There is a notion of the ‘first market price’. But this is a notion only: The first market price has no clear definition or mathematic formula. Moreover, prices may not be identical in different companies at the same time. In the event of extreme market volatility, a "gap" may evolve. This may happen when a subsequent quote differs substantially from the previous one. In this case, an order on a demo account will be executed at the price stated, while in real trading it will be executed at the first market price. There are practically no situations with a demo account when customers receive a new price. In real trading, this may happen because on a demo account the quotation is given by a computer where a sizeable departure from the current price is allowed. With a real account, dealers track requests for sharp price departures from the market quote currently available. This actually occurs frequently in real financial markets.

In order to benefit from the risk-free nature of demo trading, one has to acknowledge that there are significant differences between this and real trading.

Among the drawbacks, it is worth mentioning that, after a prolonged period of risk-free demo trading, you may initially find it difficult to switch to trading with real money due to the differences in transaction processing and the effect of volatility outlined above. This experience can be somewhat frustrating, since you often perform somewhat better with a demo account than with real trades. This can lead to you finding it difficult to tolerate losses, and perhaps thinking you’re your dealer is "playing against you", questioning the company’s quotes and order processing techniques, as well as the "first market price".

In the final analysis, the ultimate decision on how to act lies with you. We simply carry out our duty in explaining both the advantages and drawbacks of demo trading.