A forex demo account is a popular tool used by beginners and more experienced traders alike to help them become better at currency trading. Beginners use them to acquire basic trading skills while veterans practice new trading strategies on these accounts, since they trade with virtual money. You can sign up for a virtual account with nearly any forex broker, at no cost. In fact, many traders even have multiple accounts. Each account comes loaded with a certain amount of trading money that you can use to make dummy trades. However, some of these accounts are better than others, with a higher level of features.
Here is what you have to look for when you’re searching for the best forex demo account:
- Look for a broker who is recognized by the appropriate regulatory agency. The two main agencies that regulate currency brokers are the National Futures Association (NFA), the futures industry’s self-regulatory organization, and the Commodity Futures Trading Commission (CFTC), an independent agency that regulates US option markets and commodity futures. You can safely sign up with a forex demo account from a broker regulated by these agencies since they are guaranteed to be legitimate..
- Does the virtual account give you access to the broker’s real trading platform?This is very important since one of the reasons for signing up with an account is to practice with their actual trading platform in order to become familiar with their features.
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- What kind of customer support are you provided? Some virtual accounts require you to download and install the broker’s client-side trading platform into your computer. The broker should have a help desk to provide technical assistance in case you’re experiencing trouble with the software. If you don’t want to install a program into your computer, however, you can choose a broker that offers a web-based trading platform.
- How much leverage can you avail of with a forex demo account? Learning how to trade with leverage is one of the most essential skills a forex trader can develop, since it greatly boosts the amount of money you can trade with and increases your profits as well. However, using leverage is also very risky. So if you want to trade under market conditions that are as authentic as possible, you must trade your virtual account using leverage.
- Does the virtual account give you access to real-time price data? If you are testing a trading strategy, you will need to see exchange rate movements over time in order to determine if it would work. In addition, dummy trading using real-time price data gives you a genuine feel for what trading in the forex markets is actually like.
- Does the forex broker give you trading tips and other educational tutorials? These tutorials can come as either text articles or videos and provide lots of useful information on topics such as how to maximize your use of the trading platform and how to create the best trading techniques. These tutorials can greatly enhance your use of the forex demo account while helping you learn to become a better trader.