Best Forex Demo Accounts

Virtual trading is a top forex trading strategy in 2022. Trustworthy brokerage firms offer access to demo trading. It is an excellent learning tool for traders at all levels. Virtual trading allows you to try different forex strategies with live market conditions. This article discusses how to find the best forex demo accounts in 2022. 

How To Find The Best Forex Demo Accounts

The term “Demo Account” refers to a special kind of practice account. Anyone can use these trading accounts to become familiar with an online trading platform and its features in a low-risk environment.

Most people would simply do “paper trading,” which refers to keeping track of a series of hypothetical trades on paper. Today, “paper trading” generally refers to trading in a kind of digital “practice environment” where you don't risk real money. 

Most forex brokers offer some kind of free demo account. For the most part, brokers offer these demo accounts intending to provide traders the ability to test if the platform will fulfil their needs. If you are not sure which platform to go with when you are just starting out than you should check out our list of the best trading platforms.

Forex Demo Account Advantages

If you're looking for a new broker, signing up for a demo account might be the quickest and most risk-free method for testing if that trading platform has all the features you need. It's generally recommended to do this before putting any real money into an account with that broker.

Demo accounts can also be used to evaluate trading strategies and test trading robots. By using a demo account, traders are able to see how particular trading strategies would perform based on real-world data without needing to risk real money during the learning process.

Trading platforms provide charting features, indicators, and functions that are invaluable in the trading process. Signing up for a forex demo account can provide you with the valuable experience needed to confidently and quickly use a new trading platform. The more adept you are with the trading platform, the more likely you will trade profitably.

Forex Demo Account Disadvantages

Probably the most significant disadvantage with a forex demo account is that it's not real money. This removes risk, but it also removes any potential gains. Connected with this, you don't experience the intense emotional swings of real-life trading. This means demo accounts don't help you develop a resistance to emotional trading. Emotional trading is trading based on what you “feel” is the right trade. Emotional trading – instead of trading based on a strategy – is one of the leading causes of failure on the market.

Inexperienced traders also tend to be complacent when using a demo account to practice their trading skills. Subconsciously, they know that there is no real risk involved, and so they may take more significant risks then they would do in a real-money environment. This lack of emotional experience with emotional control can cause the research and learning acquired from the demo account to be less than accurate, and therefore, less than reliable in the real world.

Lastly, some demo accounts are completely removed from real market trading data. That means essential real-world factors – such as lag time, slippage, and latency – might be invisible inside of the demo account.

Alternatives To A Demo Account

If a demo account doesn't seem to fit your needs, you might consider a micro account. Micro accounts are funded with real money and can be used to simulate actual trading. For example, if you were to make it $2000 trade inside of a demo account and that $2000 trade were to increase significantly, you wouldn't make any money. However, had you been trading inside of a micro account, you might have received some of the profit.

Another benefit of micro accounts is that they provide you with real-market conditions such as surprise news, slippage, and latency. Each of these things can dramatically affect the success (or failure) of a trade.

Trading Psychology And Demo Accounts

There's a surprising amount of psychology involved in forex trading. It can be mentally and emotionally challenging, requiring that forex traders have complete control over their emotions along with a fact-based strategy for their trading behavior. If you take the demo account seriously, it can be an incredibly useful way for you to improve your mental and emotional fortitude for trading. 

Account Size Management And Demo Accounts

No matter what form of trading or investing you are involved in, risk management it's fundamental to your success. There are many different ways to manage risk and one of them that is related to demo accounts is account size management. Account size management is where you attempt to avoid significant losses in your account by choosing the size of your trades in proportion to the size of your account.

For example, if the trader has $100,000 in his trading account and decides to use 20% trade sizes ($20,000 per trade). If the first trade is lost, the account will lose 20% of its value. If two more losses of 20% happen, the account will be drawn down a total of $60,000. That trader must make a gain of 150% just to break even.

Compare that to a trader who decides to use 4% trade sizes. If this new trader also loses three sequential trades (the same as the first trader), he would've only lost $12,000 and could reach breakeven with a 17.6% gain.

Especially in times of significant market volatility and adversity, risk management is the key to staying solvent. Account size management within a demo account is a great way to develop your account size management skills.

Which Are The Best Forex Demo Accounts? 

The best forex demo accounts are available at eToro, Capital.com, Libertex, AvaTrade, Forex.com, Plus500, and FXCM. eToro has a valuable demo account for traders at all levels. Capital.com offers the best demo account for beginners. Forex.com offers a professional demo account. We share below the top demo accounts we recommend. 

Virtual Trading With eToro

78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Pros:   Features many popular forex currency pairs; Regulated by the FCA; Mobile forex trading app available; Demo trading account; Retail investor accounts   

Cons: High spreads; Limited assets 

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Virtual Trading With Capital.com

Pros:  Competitive fee structure with cost-free forex platforms; Access to many tradable forex instruments; Top-tier licenses from ASIC   

Cons:   Expensive overnight fees; Lack of ownership for stocks; Limited payment methods with no access to PayPal; Limited markets and securities 

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Virtual Trading With Libertex

Pros:  Access to tight spread CFD trading; Competitive leverage trading fees; Versatile learning tools; Excellent track record and reputation; Access to many markets  

Cons:  Suitable for professional CFD traders; No access to premium research tools; Limited customer support  

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Virtual Trading With AvaTrade

Pros:  Excellent forex trading platform with automated trading tools; Access to MT4/MT5; Low deposit requirement; Zero commissions and tight spreads 

Cons:  Expensive inactivity fees; Lack of traditional investments 

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Virtual Trading With Forex.com

Pros:  Access to a comprehensive selection of forex pairs; Impressive forex analysis tools; Excellent reputation; Dedicated learning center  

Cons:  Not suitable for equity trades; High requirement for professional client status eligibility  

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Virtual Trading With Plus500

Pros: Tight spreads; Comprehensive portfolio with CFDs, forex, and commodities; Proprietary trading platform; Valuable forex trading features, including risk management tools 

Cons: Lack of social trading tools 

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How To Start Virtual Trading? 

Virtual trading is available with online brokers. We recommend the eToro demo account. eToro is a trustworthy brokerage firm with attractive forex and social trading tools. It has an excellent multi-asset trading platform. eToro is a good choice for both inexperienced and professional traders. Here is a step-by-step guide on virtual trading with eToro. 

Step 1: Register A Trading Account 
The first step is to register a trading account. eToro offers a simple sign-up form on its website. You have to upload personal information, including your full name and source of funds.  

Step 2: Change To Virtual Trading Mode 
After you open your account, eToro will request a deposit. You should skip this step and switch to the demo mode. You will receive access to $100,000 in paper funds. 

Step 3: Choose A Forex Market 
The next step is to choose a forex market. Search for the forex pair you want to trade, and start testing your strategy.  

Step 4: Place A Demo Forex Trade 
Choose from a buy or sell order and place your demo forex trade. Submit your stake and click on the “Open Trade” button. When you close the position, you will see the profit or loss on the trade.  

Summary 

There are many virtual trading accounts available in 2022. It is best to use the services of a trustworthy forex broker. Demo trading is an excellent learning tool for traders at all levels. It helps traders profitably transition to a live account.  

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Methodology
The mission of Business24-7 is to provide comprehensive, unbiased ratings and reviews of the best forex brokers. Trading platform, fees, mobile trading, payments, assets, regulation,
education and research are all part of our six-month evaluation of a broker's account.The rating scale was based on thousands of data points that have been weighted into the scoring system. Brokerages were required to fill out a multi-point survey regarding every aspect of their platform. In-person demonstrations and evaluations were provided by the majority of the online brokers we reviewed. Stefan Grasic, along with our team of industry experts, conducted our reviews and developed this methodology for ranking what form is used in online investing.

Disclaimer
All trading involves risk. More than 80% of investors lose in spread bet and CFD trading. As these complex instruments allow for the use of leverage, there is a high risk of losing more money than you have deposited. Before attempting to participate in spread bets and CFDs, consider how well you understand them and if you can afford to lose your money.