If you’re learning how to trade forex, you may be relieved to know that you don’t have to trade real money right off the bat. Many traders practice within demo accounts before they open a live account.
If you choose the right demo account, you’ll quickly learn the mechanics of trading and analysis and you’ll be able to test your own ideas.
What are forex demo accounts?
Forex demo accounts work with trading platforms to allow you to practice trading currencies without using real money. Often referred to as “sim” accounts (short for simulation), demo accounts look and feel like you’re using real money.
Demo accounts work within established platforms to mirror real money accounts. Brokerages which offer demo accounts hope to earn your business once you begin to trade real money.
Pros and cons
Demo accounts offer many features that give traders a chance to practice skills without risking capital but don’t contain everything found in real accounts.
- Determine if you like trading currencies. Popular currency pairs tend to have the most volatile moves between midnight and early morning.
- Practice without risking money. When you’re new to forex, it can take some time to get used to placing orders and executing trades.
- Develop skills and techniques. Experienced traders always look for new strategies to test and tools to incorporate. Demo accounts go beyond backtesting and translate to real-time execution.
- Test a specific platform. When you choose a trading platform, it often boils down to personal preference. Testing a platform allows you to see how easily you can navigate, create charts and execute trades. You’ll also have a chance sift through any bugs and stability issues.
- Demo accounts may be limited in funds and duration. While many brokerages allow you to trade with simulated funds for free, they only do so for a short period of time. At some point, they want you to move from practice accounts to live funds.
- Real trading conditions differ. You only use fake money when you’re using a demo account. There is no guarantee that just because there was a bid or ask that met your criteria, an actual trade would have occurred.
- Data may be delayed or different. Not all brokerages offer live data streams for people with demo accounts. You may be working with delayed data or incomplete data from what you might get in a real account.
- You don’t learn the emotional cost of trading. Trading with real money takes an emotional toll. Losing $100,000 in a demo account feels very different than losing an actual $100,000. This often leads you to make completely different decisions in a demo account then you otherwise would in a live account.
- You may give away personal information. Signing up for a demo account requires you to provide information about yourself, including your name, address and sometimes more.
What to look & what to avoid in a simulator
Forex demo accounts come in a variety of flavors. When evaluating demo accounts, consider the following.
What to look for
- Account types, minimums, and promotions available
- Fees (only applicable to if you convert to a real account)
- Platform (including mobile) and tools
- Research and education
- Investment selection
- Customer service and support
What to avoid
- Poor reviews or legal actions taken against the broker
- Be sure the broker operates within your country
- Length of time in business
How we made our picks
When we reviewed the best forex demo accounts, we considered and compared them based on the criteria listed in the preceding sections. We also considered customer reviews as well as Benzinga’s own experience with specific platforms.
If you want to learn more about the best forex brokers for live accounts and compare to our list below, check out Benzinga’s Best Forex Broker 2019 review.
Best overall: Forex.com
- Traders of all skill levels
- If you need a great mobile experience
- Those who like easy-to-consume data and research
If you spend any time reviewing forex brokers and demo accounts, you’ll quickly come across MetaTrader as an industry standard for trading platforms. Forex.com supports MetaTrader 4 offers a fully functional platform that allows traders to analyze forex pairs across markets with a variety of charting options, as well as:
- Customizable layouts and charting templates
- Multiple technical indicators from preloaded options to custom-built functions
- Easy-to-use drawing tools
- Integration of automated trading and backtesting strategies
You can try out the populate MT4 platform (Forex.com will be supporting MT5 soon) and also test drive the Forextrader Pro platform. The Forextrader Pro platform organizes information well and allows you to easily navigate between menus and subcategories it customize layouts and
- Preloaded automated trading system strategies
- Research and news including Forex Insider commentary
- Drag and drop objects
- Multi-step order windows
If you open a demo account with Forex.com, you’ll be limited to choosing one of the two platforms as well as a 30-day trial. You can re-apply for the demo account at the end of the 30 days.
Best research and education: TD Ameritrade and CMC Markets
- Beginner investors
- Advanced traders
- Investors who want portfolio-building advice.
Both CMC markets and TD Ameritrade offer clients a treasure trove of educational content and research. CMC tends to shine when it comes to providing information more directly related to forex trading. Its content includes:
- In-house global analysis
- Insights news
- CMC markets blog and TV
- Social media channels
- Economic calendars and events
TD Ameritrade outperforms when it comes to general investor education and trading. A full-service brokerage provides traders with access to a wider array of research and educational material outside of just the forex market.
Best investment selection: CMC Markets
- Those looking for a wide range of currency pairs
- Education: has YouTube videos, webinars, and other education tools
- Unique proprietary platform
CMC Markets tops the list for investment selection due to the massive amount of currency pairs it offers. Check out the comparison to other brokers on our list:
- eToro: 47 pairs
- OANDA: 71
- TD Ameritrade: 77
- Forex.com: 84
- Interactive Brokers: 84
- CMC Markets: 183
When it comes to the number of currency pairs offered, CMC Markets offers way more than its closest competitor.
Best service and support: TD Ameritrade
TD Ameritrade tops our list for best service and support largely because of how broad TD Ameritrade’s support covers. Since TD Ameritrade is a full-service brokerage firm, clients can piggyback existing non-forex accounts to access full support and service. Customers can reach support through 24/7 phone support, email, text, Facebook and local branch offices.
Demo accounts provide a risk-free way to practice and test new ideas and techniques. However, don’t expect success to translate into real accounts. Even when you decide to make the transition to a real money account, ease into it. Look for differences in the way trades execute as well as how you execute them. Real money involves real emotions, something you can’t possibly duplicate in a demo.