Knowledge, experience, familiarity with the Forex and CFD market, as well as establishment of cooperation with the appropriate broker — these are factors that determine, to a large extent, your future gains from investing in currency pairs or contracts for differences (CFD). Before you deposit your capital on an investment account on a brokerage platform and start to “invest seriously”, it will be a good idea to use a demo account. How should you choose a test account and how does it actually work?
What is a demo account?
The vast majority of renowned brokers have prepared access to demo or test accounts for their potential clients. As the name itself suggests, it is the demo version of the trader’s investment account, through which they invest on the Forex or CFD market — depending on the assets the selected brokerage platform provides access to.
The demo account acts as a simulator of the international Forex and CFD market. You can make purchase and sale transactions through it, analyse the results of individual investments, check the market indicators and comments made available on the brokerage platform — all of it typically without incurring any costs or being obliged to create a regular investment account in the future.
At the same time, you need to know that the broker places a certain pool of virtual funds at your disposal on the demo account. Based on them, you can check how ordering buy and sell transactions for selected assets works, and additionally test investment strategies — all without risking any losses of your capital, which is certainly an important aspect for you, regardless of whether you are a beginner trader or already have some experience in this regard.
How to choose a demo account?
Before you decide to test a brokerage platform and open a demo account, check what exactly the brokerage firm will make available to you within such an account. It would be good if the demo account allowed you to order transactions in conditions that resemble the actual conditions as much as possible, i.e. conditions in which you will be operating in the future if you decide to make actual investments.
In addition, the test platform and the actual platform should not differ in terms of design and functionalities. Sometimes, brokers with which you can open a demo account only make a specific, limited range of options available on the demo account. As a result, you do not know what you will be using on the real account.
The shape of the demo account depends on the Forex broker you choose (more info: www.xtb.com). It would be good if it provided access to a convenient brokerage platform, in a mobile or browser version. Desktop Forex platforms are slowly becoming obsolete as they require installation of appropriate software on the user’s computer, which creates issues with flexibility in using investments on the Forex and CFD markets.
Check whether registration of a demo account is indeed free and whether the broker will not oblige you to sign a cooperation agreement with it and set up an actual account that requires a minimum deposit to start investing. Such a decision should be your individual choice, provided that the Forex and CFD platform you will be using meets your expectations.