Many brokers will allow you to open a free demo account with them and they will fill it with free play-money for you. This way, you can explore and trade on the platform (or platforms) without risking any of your real money.
It is a great way to find out what a broker has to offer and see if you like the platform or platforms. You can also use the demo account to learn how a platform works before you start risking any real money.
It is not fun to make a first deposit and then realize you do not like the broker or platform. Therefore, we recommend that you sign up for a demo account and do your own evaluation before you decide if you want to make a first deposit or not.
The demo account can also be used to avoid costly beginner mistakes while you learn how to use the platform. Many traders prefer to learn by actually placing orders (with play-money) instead of reading through and memorizing guides.
Read on to find out more about how demo accounts work and how to avoid common pitfalls.
Contents
- 1 Will the demo account give me access to all the platforms?
- 2 Will this demo account come with free play-money?
- 3 Is there a time limit for the demo account?
- 4 Will some features be excluded?
- 5 Legal aspects can impact the experience
- 6 Is it difficult to sign-up for a demo account?
- 7 Do I need to make a first deposit to get a demo account?
- 8 Technical analysis
- 9 Using a mobile device
- 10 Trading strategy
- 11 Demo account contests
Will the demo account give me access to all the platforms?
If the broker give their clients access to more than one trading platform, check if this applies to the demo account as well. Otherwise, you will not be able to use the demo account to find out which platform you like best.
Will this demo account come with free play-money?
Today, a majority of the serious forex brokers will offer a free demo account that comes with free play-money. If a broker will not give you any play-money, you will only be able to navigate the platform and you can not see how it would feel to actually use it for carrying out trades. We therefore recommend brokers that fill the demo account with play-money, since this allows traders to make a more well-informed decision.
Another advantage with play-money is that you can use it to test out trading strategies and see how the work with real market data.
How much play-money will I get?
This depends on the broker, but many of them will give you $10,000 in play-money. If you are doing small trades, that amount will be enough for a lot of testing and experimenting.
With some brokers, you can get more play-money if you run out of the first batch. Contact the support to find out more.
Some brokers are very generous with the free refills, because they see it as a positive thing if you keep your demo account and use it for strategy testing and exploring new features even after you have switched to real-money trading with them.
Is there a time limit for the demo account?
Some brokers are generous and will happily let you use your demo account for as long as you want, and even continue to use it after you have begun doing real-money trades.
Other brokers are more stingy in this respect and will impose a time limit on the demo account, which is negative for the trader since you will not be able to use it to test run new strategies, evaluate forex signal providers, and so on, in the future.
If there is a time limit, make sure it is not overly restrictive. Some brokers really want to stress you into making a decision and will only let you play around in the demo account for a few hours. Others realize that they should allow traders to figure things out as their schedule allows and will for instance give you a 30-day demo account.
Will some features be excluded?
Sometimes, certain features of the trading platform will be excluded for traders logging in using a demo account. You may for instance not be able to access services for economic news, trading tips or educational materials, since the broker fears that traders would sign up for a free demo account just to get these perks for free.
Legal aspects can impact the experience
There are cases where a broker, for legal reasons, can give you access to a wider range of instruments in the play-money account than what you will find when you log in to trade using real money.
There are for instance many countries that have banned or severely restricted brokers from offering binary options to non-professional traders, and these bans and restrictions are for real-money trading.
There can also be stricter limits in place for the size of the leverage once you start using real money.
Is it difficult to sign-up for a demo account?
That depends on the broker.
There are many great forex brokers out there that make it really easy to sign-up for a demo account. You may for instance only be required to enter and confirm your email address.
If a broker i requiring that you share a lot of personal information in order to get a free demo account, it can be a good idea to be cautious. When it comes to real-money trading and real-money withdrawals, brokers are obliged to ask you to verify your identity and address to comply with anti money laundering routines, but there is no such requirement for play-money trading.
No registration demo account
Some brokers offer a no registration demo account. This means you can log into the platform without signing up and without sharing any personal information.
The downside is that the account will vanish after each session. You can not use it to test-run any longer-term strategies and you will have no saved trading history to analyze.
Do I need to make a first deposit to get a demo account?
With most brokers, no. But there are exceptions.
If a broker require that you make a first deposit before they give you access to a demo account, this is a bit of warning signal. After all, one of the main reasons to open a demo account is to test out a broker and a platform before committing any money.
There are many great fx brokers available that will give you a free demo account filled with play money without asking for a first deposit, so there is really no reason to accept a broker’s demands for a first deposit.
Forex brokers that know they have a great product will be happy to let you take a look and do play-money trades before you make your decision. There is no need for them to convince you to buy a pig-in-a-poke.
Important: If you decide to make a first deposit and buy the pig-in-a-poke, check beforehand if any trading requirement will apply to the deposit. If there is a trading requirement, you will not be able to simply withdraw your money if you dislike the broker or platform. With some brokers, there will only be a trading requirement if you accept a welcome bonus. With others, the deposit will be locked with a trading requirement even if you turn down the bonus money. Fortunately, this shady practice is not very common nowadays, but it is still important to keep your eyes open and read the fine print to avoid the brokers that still have these rules in place.
Technical analysis
If technical analysis is a part of your trading strategy, a free demo account is a great way to explore the technical analysis tools built into the platform and see how it would be to use them for real-money trading.
Using a mobile device
If you plan on using a mobile device (smartphone or tablet) to access your account, make sure you go with a broker where the demo account allows you to check out the mobile offering.
Accessing a trading platform on a mobile device with a small touch-screen can be very different from using a big monitor desktop computer, so you need to evaluate the platform on each type of device you plan on using.
Generally speaking, the mobile trading experience tends to be better when there are dedicated mobile apps available and you do not need to access the platform using the browser on your mobile device.
Make sure you get access to all relevant features even on your mobile, e.g. deposits and withdrawals, and live chat with the customer support.
Trading strategy
When you have your demo account, there is nothing wrong with playing around a bit. However, we also suggest you devote time to test out how it feels to use this platform and interface to carry out the specific strategy you are planning to use when you switch over to real-money trading. After all, that is what is important.
Demo account contests
Some brokers arrange demo account contests where you participate with play-money and can win little prizes.
While this might seem as just a diversion, it is actually a good way to experience how it feels to put something on the line before you move on to real-money trading.
When prospective traders are handed $10.000 in play-money they often go wild and make trades they would never risk if it was their own hard-earned cash. This is fun and can help you explore the platform, but it doesn´t prepare you for the feeling of doing trades where you actually risk something and need to be strategic and carry out proper risk management.
With a play-money contest, there is not real money on the line, but there is still something worth fighting for. The glory of winning and maybe also a small prize. Instead of just trading haphazardly, you are trading knowing full well that your results are being compared to the results of other traders.
Of course, it is not the same thing as putting your own money on the line, but it is a step in the right direction psychologically. Therefore, participating in play-money contests is not a waste of time for the novice trader. It will help you figure out if this is a platform and interface that you will feel comfortable using when making fast decisions and risking real money.