June 20, 2024

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Demo Account and The Choice of a Forex Broker

Demo Account and The Choice of a Forex Broker

The variables that can influence the choice of which forex broker to use to move our money are quite numerous, but one of those that we consider fundamental is linked to the quality of the virtual (or demo) account that a forex broker can offer.

Doing forex trading can be an improvised activity to those who have no experience at all and think they can make a lot of money in a short time; however, it can be chosen from those who have already had a bit of experience with the financial world and are looking for investment opportunities with a higher amount of risk against potential higher profits.

Precisely for these subjects and not for beginners traders in search of easy profits, a careful analysis of the quality of the virtual or demo forex account is absolutely crucial.

A first successful step for those who decide to invest part of their funds in the forex is becoming aware of what market is going to be explored, but also of the technical tools that a broker can offer.

The forex demo account (or practice account) is a trading platform where the trader can virtually trade on currencies, but not only that, as even commodities, stocks, indices can also be offered by the broker.

Getting to know the markets with no real money is an important first step to avoid running into common mistakes such as volatility, margin requirements, seasonal factors, etc… that can destroy the invested capital in a few wrong moves.

The demo account, however, is also a useful tool to test customized trading systems, and verify their effectiveness on the forex market. Strategies working on the equity market are not always  effective in forex, also due to the difference in trading hours, the presence of market movers per hour, but also and above all the leverage effect.

Therefore, the demo accounts allow us to make an accurate analysis of the forex broker and from the emerging characteristics we can understand the quality of the intermediary.

For example, the possibility of using the demo account for a long time or even better for an indefinite period is an important factor in the choice of a broker.

The ease of activation and use, but also the availability of prices in real time on the demo account or levers similar to those of the real market are other essential factors.

The most attracting element anyway is the chance to get a  welcome bonus on the real account in the case of using the demo account.

Finally, we should think about the forex trading platform that can be used after opening a demo account. The more numerous the options to use the platform that the forex broker offers us to make trading are, the more interesting the proposal of the service provider is.

The quality of the demo account is only one of the factors that come into play when choosing a forex broker, but it is certainly an essential factor not to be overlooked.