Are you planning to grow the assets in your investment portfolio? Are you looking for new markets that could provide you with above-average profits? Sooner or later, you will come across the international Forex and CFD markets, which are changing dynamically. Here, you can invest in currency pairs or contracts for differences, respectively. However, before this happens, there is a lot for you to learn, including in terms of practical aspects of making investment decisions on the Forex and CFD market. A demo account made available by the broker will undoubtedly help you with this. How to choose the best account of this type and what features are particularly worth paying attention to?
Providing a Demo Account
A demo account, also known as a test account, allows you to prove yourself in a trader’s role, but without the risk of losing some or all of your funds. This is because it is not a real investment account, but an account that operates in conditions similar to real ones. As a client, you can choose the broker with which you will test the role of a trader based on a demo account.
First of all, check whether the chosen brokerage firm makes such a test account available at all and whether it is fully free of charge. This should be the case, although it cannot be ruled out that the tests will have a time limit, will not allow for testing full functionalities of the trading platform and, in addition, the broker may oblige the client using the demo account to open an investment account and pay the required minimum deposit after this stage.
The best-case scenario for you as a young trader would be if the demo account could be opened without any obligations (recommended demo account: https://www.xtb.com/en/demo-account), gave you access to testing the trading platform’s functionalities without a time limit and in conditions that are as close to the real ones as possible.
The Amount of Funds Made Available
On each demo account, the user receives a pool of virtual funds that allow them to conclude their first and subsequent transactions. Remember that this money is not real; it does not belong to you, so neither the profits nor losses caused by investment decisions will be yours. The virtual funds are made available to traders for testing purposes in various amounts by brokerage firms. In fact, the larger these amounts are, the better. This is because thanks to a large pool of available funds, one can test the various features of the platform even better, order large investments, assume buy and sell positions, and first and foremost — test individual investment strategies.
Who is the Test Account Intended for?
It is commonly believed that demo accounts on brokerage platforms are intended for young investors, who have no experience in investing on the Forex and CFD markets. However, this is not entirely true, at least when it comes to the majority of test accounts with brokers (https://www.xtb.com). Long-term participants of the Forex and CFD markets also use demo accounts in order to facilitate the choice of their next investment strategy. In such a case, they do not have to risk their money to test different currency pairs on the international market or leverage use.
When choosing a test account on the brokerage platform, see what tools it provides you with. You can treat it as an account that allows you to check whether the specific platform is clear and easy to navigate. If you become convinced that such an account is appropriate for you, take the offer of an actual trading account and close the demo account in the end.