The essential guide to opening your first demo trading account
Photo by Adam Śmigielski on Unsplash
Your first demo trading account is a step toward financial freedom—if you do it correctly.
A demo trading account will show you that financial freedom using forex trading isn’t as easy as the finance bros make it out to be. Still, statistics show that 3.2 million people globally are dabbling in forex trading, with the market worth $7.5 trillion in daily trading volume.
Could some of that $7.5 trillion become yours? Yes, if you know what you’re doing, a demo trading account is without risks and an excellent way to learn.
Read on to learn how to open your first trading account.
Step-by-step guide to opening your first demo trading account
Opening your first demo trading account isn’t as complicated as opening a real one. Well, opening a real one isn’t complex, but there’s an overwhelming sense of real-life risk and financial turmoil. Still, even with a demo account, you want to do it correctly to get the most out of the experience of learning how to trade.
Here’s a step-by-step guide to opening your first demo trading account.
Step 1: Follow account creation instructions
Most often, you will have to sign up for a trading platform and then specifically opt for the virtual trading view or a similar name. Sometimes, it will simply be called demo view, demo account, or anything along the lines of that where you’re not putting any real money into it.
It goes without saying that if you’re being asked to deposit real money to make a trade using your direct debit, Apple Pay, Google Pay, or whatever type of payment method they’re requesting, you’re absolutely not in the demo account section, and your real money will go through the trade.
Because most demo accounts are offered through actual forex trading platforms you will have to add your details before you can trade for free. Your personal details will include:
- Full name
- Date of birth
- Home address
- Valid email
- Identity confirmation (not always)
- Bank account details
Don’t worry when it asks you to put in your bank account details. This is standard procedure for apps and platforms related to forex trading. You’ll only begin to actually use your money when you move from the demo trading account to the standard trading account, and you’ll have to authorize and verify the deposit you’re making.
Don’t worry, money won’t just fly out of your account (unless you make a bad trade).
Step 2: Confirm your account
This step is simple—you’ll receive an email and sometimes a code to your phone to confirm your account. Any good trading account will also send a code to your phone whenever you log in or try to make a deposit.
Once you confirm your account, you can begin to enjoy free demo trading…in the correct section of the app/platform.
Step 3: Follow the app/platform tour (if they have it)
You’ll have asked yourself ‘What is forex trading?’ Most apps and platforms will give you a guided tour and explain the concept—we highly recommend you follow this. It will explain trading signals, how and when to trade, and how to get the most out of the app.
Before you do anything with your real money, you should 100% understand every aspect of the app and at least 80% understand how to trade forex. Any good app will help you understand your questions, but we’d recommend doing your own extensive reading and research before starting for real.
Risk-free investing
Demo accounts will give you ‘money’ to play with. Money, in the sense that it isn’t real, is virtual money that you can trade to see how successful you would be. They create real-life trading scenarios and teach you how to read trading graphs, signals, and really the basics of forex trading.
Bear in mind, knowing the basics of forex trading isn’t enough—it’s the real-life experience of managing a chaotic trading window that shows you if you can put your money where your mouth is…or where your thumbs can click fast enough.
A real-day trading window is from 5:00 PM EST on Sunday until 5:00 PM EST on Friday—24 hours a day, 5 days a week. The market is closed on weekends and sometimes on US bank holidays.
The most chaotic time to trade is between 08:00 and 12:00 EST. This is when the US and London (UK) financial markets overlap and create the heaviest trading hours but the best opportunities. Do it right and make the right trade, and you really could close a big deal in the morning and be booking your flight to Barbados by the afternoon. Do it wrong, and you could be on Indeed faster than you created your demo account.
That’s why we think it’s essential to use a demo account before you do anything else. Lose it all, and you really do lose it all.
Should you trust forex trading courses?
We would say it depends on where it comes from. If you have a suspicious-looking forex bro (or girl) page contacting you through Instagram asking you to sign up for their forex trading program with the promise of showing you how they became rich and that they can do the same for you, we’d say no.
That was a huge scam on Instagram at one point, but it seems to have died down a little now.
However, there are some excellent forex trading courses you can take online. You can generally determine the difference between someone who is genuinely knowledgeable and has made good money through forex and someone who’s trying to sell a ‘get rich quick’ scheme. You can also read reviews, specifically verified Google reviews, to find a good course.
We will say that a lot of people are self-taught. They’re following YouTube tutorials, they’re practicing using demo accounts, and they’re spending a lot of time actually learning everything about trading. They’re the ones driving around in their Lamborghini Urus after closing a $25,000 trade before 10 AM.
It’s also worth saying that a demo account won’t make you an expert. Most of them have incredible guides and can talk you through the trading process, but they can’t teach you how to predict and follow macroeconomics that massively influences forex trading. They can’t teach you when to hold and when to sell based on those macroeconomics. They can’t teach you what to do when you lose money on a trade and panic.
Trading courses can, and we’d highly recommend finding a person or company you trust to teach you not only the basics but everything about forex trading alongside using a demo trading account.
Setting up and using a demo trading account is easy. Taking the step to a real trading account is where it gets tricky. Find an app/platform you feel comfortable using and get practicing!