Forex trade is the buzzword these days. Forex refers to the process by which one currency is converted to another at the prevailing market rate. Such transactions are often done for various practical purposes. For example, when you go on that long-awaited trip to Europe, you must convert your currency into euros. In layperson's terms, you shall have to buy Euro with the currency you currently possess. This currency exchange is popularly called Forex. Visit best forex brokers

When such transactions are initiated to gain monetary profits, they are called Forex Trade. It is very similar to stock trading, the only difference being that the commodity traded in this case is the currency.

What is a Forex Account?

To undertake any forex trade, you must possess a forex trading account. You can deposit funds in such an account in your home country's currency. You can use these funds to buy and sell other currencies at the prevailing rate of the day. Thus, a forex account can be termed as one which is used to maintain and trade in foreign currencies.

Concept of Forex Demo Account:

Forex trading is a relatively complex affair. There are a lot of variables that one must observe to gain insights about market trends effectively. The volatility of the forex market makes it both lucrative as well as very risky.

Traders who have just stepped into the forex market usually lack the skills and expertise to execute successful forex trades. Often they undertake transactions based on partial knowledge and make decisions based on gut feeling rather than solid market research. Thus, greenhorns lose a lot of money in the initial phase. Most traders sustain heavy losses in the first four months of entering the forex market and end up closing their accounts.

Forex Demo Account is meant to aid such individuals. A demo account trades in the live forex market but with virtual funds. Thus, a new trader can trade in the real forex market, test his strategies, and evaluate his methods using a demo account without fearing losing his hard-earned money. Experienced traders highly recommend always starting with a Forex Demo Account.

How to Open a Forex Demo Account?

A demo account benefits both novices in the field of forex trading and seasoned traders with years of experience. The process of opening a Forex Demo Account is quite straightforward.

Before opening a demo account, choose a forex broker you intend to sign up with. While doing so, you should go through the broker's legitimacy, check the features offered by the same, and have a clear idea about the fees charged by the broker.

Visit the broker's official website of your choice and register by filling out a simple form.

After the registration process is complete, you shall receive a notification on your email id.

Now you must download a trading platform listed with your broker.

All popular trading platforms have a desktop, mobile, and web applications. You can download one or all of the applications as per your requirement.

Nowadays, some brokers employ an advanced algorithm that automatically opens a forex demo account for its users upon registration at its website.

After downloading the trading terminal, you must start the installation by double-clicking on the application.

Now you can launch the platform. You shall be prompted to choose a trading server at the first launch. Every reputed broker has multiple servers located at different geographical locations across the globe. You should ideally select the one that is closest to you.

The application shall allow you to open a real or demo account. Once you select 'Demo Account,' you shall be redirected to the Trader’s Cabinet on the broker’s website.

Now you have to select the ‘Accounts’ tab from the Trader’s Cabinet and click on the 'Open a Demo Account' option. The terms and conditions of opening such an account shall be displayed after that.After you accept the same and fill in the required details, your demo account shall be created.

To trade using the said account, you shall have to log in to the MT4/MT5 application and select File, followed by the 'Connect to the trading account' option.

Popular trading platforms:

The working of a forex demo account is very similar to that of an actual forex account. Once a trader is used to the look and feel of a demo account, they shall face no problem executing trades using the real deal. The only difference between the two is that the trader shall earn or lose real money and not make-believe currency, as in the case of a demo account.

Some of the most widely used trading platforms are as follows:

MetaTrader 4 (MT4)
MetaTrader 5 (MT5)

Though MT5 is a more updated version of MT4, both these platforms provide all the necessary functionalities for forex trading. It is a matter of personal choice that mostly influences the decision between these two platforms. Both platforms have a desktop as well as mobile applications. A demo account can be opened using any of the versions.

Things to Keep in Mind While Trading Using Forex Demo Account:

Demo accounts are a blessing for inexperienced traders. They can study market trends, keep abreast with the latest news and developments that might affect the market, and experiment with different trading strategies using a demo account. They do not have to fear losing their valuable funds to misjudgment and bad decisions.

However, a t times, this immunity to financial losses makes one numb to the possibility of the same. When real money is involved, a lot of emotional factors come into play that may affect trading decisions. But since the losses in a demo account are not real, the same level of emotional upheavals are usually not felt by traders. Know more نسخ التداول

Thus it shall be prudent for new traders to treat the virtual money as their hard-earned funds to mimic the conditions of a real trade effectively. This shall train them for future trades and teach them the much-needed mental stability needed while executing real transactions.