A demo account is a virtual Forex trading account designed for beginners. A demo account is the same as a real account, except for the money in the account. A real Forex account is funded by the trader, but a demo account has virtual money provided by the broker.
Real accounts are funded with real money by the trader, demo accounts are funded with virtual money by the broker
This virtual money can only be used in the demo account and cannot be converted into real money. Because they work the same way as real accounts, traders with demo accounts will face real market conditions.
Demo accounts simulate real market conditions
Demo accounts are always free. This works for both traders and brokers: Traders get hands-on experience before making a deposit and brokers want new traders to have a good time trading without any risk. This makes it more likely for a new trader to open a live account.
Demo accounts are always free
Demo accounts also offer traders the opportunity to practice what they have learned. Demo accounts are used by experienced traders to test new strategies, new trading robots and new trading platforms. Traders should always keep their demo account open.
Traders should always keep a demo account open
Demo accounts are all about learning. When comparing demo accounts new traders should also look at how a broker helps beginners. Other things to consider are:
- Education material
- Customer service
- Market analysis
- Trading conditions
How to Choose the Best Demo Account?
Traders should choose a Forex demo account that never expires. Some brokers will only offer demo accounts for a short period of time, sometimes as short as one week.
Choose a Forex demo account that never expires
Demo accounts that never expire allow you to practice at your own pace. You are not under pressure to complete your education within a set time. With a demo account that never expires, you can also continue your trading education once you have a live account.
FXTM, Plus500 and XM all offer demo accounts that never expire.
When choosing a demo account, it is also important to think about what trading platform you will be learning to use.
Choose a demo account with the trading platform you want to use
MetaTrader 4 (MT4) is supported by nearly every Forex broker and is a good, user-friendly platform for beginners to start with. Because it is so widely supported there are many online tutorials and guides for beginners.
MetaTrader 5 (MT5) is similar to MT4 but has extended features and a more modern interface. cTrader is another popular platform, though is less widely available.
The most popular trading platforms are MetaTrader 4, MetaTrader 5 and cTrader
FXPro, Pepperstone and OctaFX all offer demo accounts for all three platforms (MT4, MT5 and cTrader).
It is important to reiterate that demo accounts are simulations of live accounts. For the true trading experience, you should open a demo account with the same minimum trade size as you would use in your live account.
If you plan to be doing a lot of mobile trading, it makes sense to open a demo Forex account on a mobile app as well. Make sure that the trading app works well on your mobile phone.
Choose a demo account that works well on your mobile phone
Mobile trading apps have evolved a lot over the years since the first ones became available a decade ago. To a large extent, the functionalities of Forex demo accounts available on desktop platform terminals are now captured by mobile apps.
Why Use a Demo Account?
Use a Forex demo account so that you will not lose any money while you are learning. Forex is a high-risk venture and 70-90% of traders will lose money. It is really that simple.
You cannot lose real money with a demo account
Of course, you will not make any profits either. But beginner traders rarely profit by jumping straight into a real account.
Yes, there is a (very) small chance you will be lucky and make a profit. But this is no better than gambling. And like gambling, the house always wins in the end: You may make a profit once or a few times, but eventually, you will lose.
Being profitable depends on how well you know the Forex market and your ability to use your trading platform correctly. It also depends on the performance of your Forex trading strategy.
Use a demo account to learn how to trade, gain platform experience and perfect your strategy
How to Learn to Trade with a Forex Demo Account
When you are learning to trade Forex with a demo account, these are the concepts you should cover as part of your practice sessions.
Leverage and Margin
Leverage is money borrowed from your Forex broker which allows you to open much larger trades than you would with just your own money. The margin is the deposit required from you to open a trade. This is real money taken from your trading account.
Leverage is money borrowed from your broker to increase the size of your trade
Calculating how much you will borrow and how much you will need to deposit when opening a trade is an important part of managing your risk. This means understanding how leverage and margin can affect the size of your orders.
Spreads and Currency Pairs
You should go through the list of currency pairs and know which ones are the major pairs, minor pairs, and exotic pairs. Understand how they are priced and why exotic pairs have a larger range of movement than major currencies.
Exotic pairs have a larger range and wider spreads than major pairs
It is also important to know the spreads for each currency pair you plan to trade and to discover whether they are fixed or variable.
Order Types
Forex is about buying and selling currencies, but there are various ways to do this. The different ways to buy and sell currencies are called order types.
The two common order types are buy and sell. These are instant orders to buy or sell a currency pair at market price. Then there are limit orders, stop orders and pending orders. Each one of these has variations that can give traders an edge, depending on the market situation. They can also be combined to better manage risk.
Each order type has its own purpose, and they can be combined
Traders should also know how to set the prices for pending orders and set the expiration time for execution of pending orders.
Charting and Tools
Reading and modifying charts is an essential part of Forex trading. You will need to understand how to change time frames and how to add indicators and oscillators to the charts.
Charting is an essential part of Forex trading
You will also need to understand how plug-in tools work. Autochartist is a tool that plugs-in directly to MT4, MT5, and cTrader and helps you detect chart patterns and trading opportunities.
Fundamental Analysis: How Fundamentals Affect Price and Volatility
Fundamental analysis is the study of how news events affect price action and volatility. Most brokers will have an economic calendar with the upcoming data releases for the major economies but trading unpredictable geopolitical events, such as Brexit or the Covid-19 pandemic, is a very tricky business.
Trading geopolitical events, like the Covid-19 pandemic, is a tricky business
You will need to learn how each currency pair that is listed on the news calendar responds to high-impact news releases. Once you understand a currency pair’s response you can learn to trade the initial spikes when news is released.
Technical Analysis: Support and Resistance Levels, Signals and Patterns
Technical analysis is the study of historical price movement to predict future price movement. Technical analysis occurs almost entirely on charts. Each platform comes with a variety of line tools, Fibonacci tools and other tools necessary for chart studies.
Technical analysis is the study of historical price movement to predict future price movement
With a Forex demo account, you can learn how to use these tools to plot support levels, resistance levels, chart patterns, retracement and extension levels, and create trade alerts.
Gaining Platform Experience: MT4, MT5, cTrader and other Platforms
Learning starts with understanding your Forex trading platform and its features. Before you start trading with real money you should be able to answer all the following questions about your platform:
- How do you pull charts, change time frames, and add indicators?
- How do you deploy Forex expert advisors (EAs)?
- How do you add custom indicators to your platform?
- How do you adjust indicator parameters?
- How do you set up market orders, pending orders, stop loss and take profit orders?
For this reason, you should use the same platform for your demo account and your live account.
Use the same trading platform for your demo account and your live account
You should also use the same amount of virtual money in your demo account that you will fund your live account with. By doing this you can use the same lot sizes and other parameters to mimic the exact conditions that you will face in live trading.
More than 98% of Forex brokers offer demo accounts on the MetaTrader 4 (MT4) platform. However, the MetaTrader 5 (MT5) and cTrader platforms are also available for those who want extended functions such as algo trading (cTrader) or a Depth of Market (DOM) tool (MT5).
More than 98% of Forex brokers offer demo accounts for the MT4 platform
Some brokers also offer their own platforms. While these are often easier to use for beginners, you should only use them for demo trading if you plan to open a real account on the same platform.
Indicators and Robots
Once you have mastered the use of the trading platform, it is time to use your demo Forex account to test your strategies and to learn the best use of indicators and Forex robots.
The emphasis is not to give yourself a false sense of security by just posting profits, but to understand how each indicator works. You also need to find out how well your indicators and robots work in live market conditions. You will also need some theoretical knowledge of the categories of indicators available and how they are used.
How do I Prepare for the Step Up to a Live Account?
Unfortunately, the answer to this is: You cannot.
A drawback of Forex demo accounts is the reduced psychological impact when using them. When traders know that no real money is involved and nothing is at stake, they disconnect from the seriousness of the situation – it is human nature.
Trading with a demo account does not have the same psychological impact as trading with a real account.
However, when real money is involved, traders will find anxiety and self-doubt to be near-constant companions. Forex trading with a demo account cannot prepare you for dealing with these emotions, and you should be aware of this psychological challenge.
Furthermore, slippages and requotes that can occur in real money trading do not exist when using a demo Forex account.
How do you open a Forex Demo Account?
Opening a demo account only takes a few minutes. To get started:
- Visit a Forex broker where you would like to open an account
- Complete your personal information
- Verify your phone number or email address
- Follow the instructions on your screen and in your email.
Forex Risk Disclaimer
Trading Forex and CFDs is not suitable for all investors as it carries a high degree of risk to your capital: 75-90% of retail investors lose money trading these products.
Forex and CFD transactions involve high risk due to the following factors: Over-leveraging, unpredictable market volatility, slippage arising from a lack of liquidity, inadequate trading knowledge or experience, and a lack of regulatory protection for clients.
Traders should not deposit any money that is not disposable. Regardless of how much research you have done, or how confident you are in your trade, there is always a substantial risk of loss. (Learn more from the FCA or from ASIC)
Our Methodology
Our State of the Market Report and Broker Directory are the result of extensive research on over 100 Forex brokers. The explicit goal of these resources is to help traders find the best Malaysian Forex brokers – and steer them away from the worst ones – with the benefit of accurate and up-to-date information.
With over 150 data points on each broker and over 3000 hours of research and review writing, we believe we have succeeded in our goal.
In a world where trading conditions and customer support can vary based on where you live, our broker reviews focus on the local trader and give you information about these brokers from a Malaysian perspective.
All research has been conducted by our in-house team of researchers and writers, gathering information from various company representatives, websites and by sifting through the fine print. Learn more about how we rank brokers.
4.17
Accepts Malaysian Clients. Average spread EUR/USD 1.90 pips on trading account with lowest minimum deposit. Islamic account available. MT4 & MT5 platforms supported. Leverage offered can vary depending on country of residence, and your trading knowledge and experience. FXTM is regulated by CySEC, FCA, FSCA, and the FSC.
