A Forex demo account is a capital-risk-free account but risks misplaced confidence for manual traders. Traders can test the trading environments of brokers or try different trading strategies. It is also necessary to evaluate automated trading systems.
Read on to view my selected shortlist of the best Forex demo account brokers below, and tips on how to pick the best demo account and get the most out of it.
- FXTM, Best all-around broker with high floating leverage and fast execution.
- FP Markets, ECN trading with leverage up to 1:500.
- Eightcap, Competitive pricing + excellent daily videos.
- BlackBull Markets, Best ECN trading environment, with scalping and hedging.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
Best Demo Accounts Comparison
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Regulators | CMA, CySEC, FCA, FSC Mauritius, FSCA | ASIC, CMA, CySEC, FSCA | ASIC, CySEC, FCA, SCB | FMA, FSA | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID |
Year Established | 2011 | 2005 | 2009 | 2014 | 2006 |
Execution Type(s) | ECN/STP, Market Maker | ECN/STP | ECN/STP, Market Maker | ECN/STP, No Dealing Desk | Market Maker |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 0.1 pips | 1.2 pips | 1.0 pips | 1.3 pips | 0.9 pips |
Average Trading Cost GBP/USD | 0.2 pips | 1.4 pips | 1.2 pips | 2.0 pips | 1.5 pips |
Average Trading Cost Gold | $0.18 | $0.16 | $0.12 | $0.90 | $0.29 |
Trading Platform(s) | MetaTrader 4, MetaTrader 5, Proprietary platform | MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, Trading View | MetaTrader 4, MetaTrader 5, cTrader, Trading View | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ |
Islamic Account | |||||
Negative Balance Protection | N/A | ||||
| Visit Website | Visit Website | Visit Website | Visit Website | Visit Website |
FXTM
In Summary Best all-around broker with high floating leverage and fast executionFXTM is a global broker specialising in CFDs and FX and was established in 2011. The company is considered reliable and trustworthy since it features regulation through the UK Financial Conduct Authority (FCA), as well as through Cypress Securities and Exchange Commission (CySEC). FXTM offers potential users several account options including live and demo account options. The FXTM Demo account offers traders a 100% risk-free trading environment and mimics their live trader accounts perfectly. The FXTM Demo account gives you all of the exact same features and financial instruments (including live quotes) that you would get when opening (or migrating to) an FXTM Live trader account.
Pros & Cons
- Excellent commission-based Forex pricing environment and transparency
- Upgraded MT4/MT5 trading platforms plus proprietary mobile trading app
- Quality market research and educational content for beginner traders
- A highly regulated broker with a tier-1 license
- No cryptocurrencies and limited choice of commodities
FP Markets
In Summary ECN trading with leverage up to 1:500Founded in 2005, FP Markets is a well-established and well-regulated CFD and forex broker based in Australia. The company is primarily regulated through the Australian Securities and Investments Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC), with additional regulation through the Financial Services Authority of St. Vincent and the Grenadines. FP Markets offers plenty in terms of education tools such as their free demo account and eBook resources. Users are able to enjoy all of the tools and features of a live account, with an easy sign up process. However, it’s important to note that your demo account will only be available for 30 days from the time that you set it up.
Pros & Cons
- Choice of trading platforms and auxiliary trading tools
- Very competitive cost structure and excellent asset selection
- Low minimum deposit requirement and leverage of up to 1:500
- Well-regulated and trustworthy
- Availability of Iress geographically restricted
Eightcap
In Summary Competitive pricing + excellent daily videosWhile the Eightcap demo account has a default restriction of 30 days, traders can contact customer support to request necessary extensions, which unlock the full potential of demo trading. Eightcap offers complete flexibility during the account registration process for its MT4 and MT5 demo accounts, allowing traders to select parameters like account type, leverage, and demo account balance similar to planned live portfolios. It ensures that demo trading results are as close as possible to live accounts.
Eightcap also maintains quality educational content, allowing beginners to incorporate lessons while using Eightcap demo accounts for educational purposes, shortening the learning curve.
Pros & Cons
- Low minimum deposit and high leverage of up to 1:500
- Competitive cost structure
- Excellent technology infrastructure and seasoned management team
- Daily research and quality educational content
- Limited leverage in some areas
BlackBull Markets
In Summary Best ECN trading environment, with scalping and hedgingBlackBull Markets was founded in 2014 in New Zealand. Like many good demo account Forex brokers, BlackBull Markets is an ECN broker, offering raw spreads and commissions. It is regulated in New Zealand by the Financial Services Providers Register (FSPR). In addition to their global headquarters in New Zealand, BlackBull Markets also has presences in the form of branch offices in New York and Malaysia. BlackBull Markets offers a relatively tight range of tradable assets: 27 Forex currency pairs and crosses, gold, silver, crude oil, natural gas, and 6 major equity indices. That should be sufficient for those traders with more focused strategies not requiring wide diversification.
Pros & Cons
- ECN/NDD execution model with deep liquidity
- Institution-grade pricing for retail traders via proprietary price aggregation
- ZuluTrade and Myfxbook for social trading
- Leverage of up to 1:500
- Limited deposit options
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsAvaTrade is one of the leading CFD and forex brokers in the world, and enjoys regulation in Ireland, Australia, Japan, South Africa, Abu Dhabi, British Virgin Islands, and Israel. First time users have the option of signing up for a live account or a free demo account. The demo account is very easy to set up, and offers all of the same features and tools that you would get when creating your live AvaTrade account. This includes all technical indicators and prices in real time. The AvaTrade Demo account equips users with $100,000 in virtual funds, allowing users to trade in real time and in a real world environment, and all trades are 100% risk-free.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
What Is a Forex Demo Account and Why Use It?
A Forex demo account is a risk-free account that brokers offer. It requires no deposits or account verification. Beginners and seasoned traders use demo accounts for various reasons. The best Forex brokers offer unlimited demo accounts so long as traders use them and allow traders to customize demo accounts to reflect their live portfolios. The back office enables traders to increase the account balance and adjust their leverage ratio.
Here are the reasons why Forex traders use a demo account:
- Beginners can test the trading platforms and incorporate educational lessons
- Seasoned traders can evaluate the trading conditions of a broker
- Seasoned traders also use demo accounts to test new strategies or tweak existing ones
- Algorithmic traders can bug-fix and test trading solutions
- Copy traders can evaluate signal providers before committing capital to a strategy
How to Choose a Forex Demo Account
Not all demo accounts are equal. My tips below will help traders pick Forex demo accounts that are beneficial to their requirements.
Here are my tips on choosing a Forex demo account:
- Ensure the demo account has no expiry so long as it is being used
- Choose a demo account that allows you to select your leverage and demo account balance
- Check the back office and make sure you can add funds or adjust the leverage of existing demo accounts
- Pick a Forex broker that allows you to open multiple demo accounts so you can keep testing multiple parameters
- Only use demo accounts at brokers that do not require account verification (registration is a requirement) to avoid pressure to deposit, cold calls, and other marketing-related behavior
Forex Demo Accounts – Only for Beginner Traders?
Despite popular belief, seasoned traders use demo accounts more than beginner traders. Demo accounts fulfill a necessary service, and many successful traders rely on them to test and tweak strategies. Algorithmic traders always test and bug-fix their trading solutions, tweak parameters, gather data, and compare results. Traders who use copy trading solutions should evaluate signal providers in a demo account for several months before following strategies in live portfolios. Therefore, beginner traders account for the smallest group of demo account users.
How to Open a Forex Demo Account
Log into your Forex demo account, with the step-by-step guide below. While individual steps may differ slightly in wording between Forex brokers, the steps remain identical.
Here is how you open your Forex demo account:
- Go to the homepage of your Forex brokers and click “Demo” or anything with similar wording.
- The demo account registration should ask for minimal details. In most cases, an e-mail address and desired password for the back office suffice. Some brokers ask you to fill out a standard account registration that may include your phone number, as they will send a confirmation PIN.
- Define your leverage settings and demo account balance. Forex brokers with multiple trading platforms, account types, and base currencies will allow you to select them.
- You will receive a confirmation e-mail from your Forex broker.
- Download the trading platform. You can start using your demo account with the login data provided by your Forex broker.
Tips for Using a Forex Demo Account
My tips below will help demo traders improve their Forex demo trading experience and avoid its shortfalls.
Tips on using your Forex demo account:
- Treat your Forex demo account like a live account
- Customize your Forex demo account settings to reflect your planned live portfolio
- Trade lot sizes based on expected live deposits
- Study the relationship between risk management and leverage
- Evaluate your strategy, tweak it, test new ones, gather trade data, and compare performances
- Demo trading lacks exposure to trading psychology, and you must understand the impact on your trading results
- Incorporate educational lessons from trading psychology to risk management strategies and their relationship to leverage
The Advantages of a Free Demo Account for Forex Trading
Understanding the advantages of a Forex demo account, sometimes known as a practice trading account or paper trading, will allow traders to benefit optimally. I recommend that new traders consider the aspects below:
- A Forex demo account allows traders to test the broker’s trading environment.
- It also offers an opportunity to experience the trading platform and learn its functionalities.
- Another benefit is that traders can experience how trading costs impact profitability.
- Traders can test new strategies or tweak existing ones to see the difference.
- A demo account is ideal for testing automated trading solutions before taking them live.
- Developers use a Forex trading demo account to test their solutions and fix bugs.
The Disadvantages of a Trading Demo Account
Before blindly following the commonly accepted advice that one can learn how to trade in a demo account, I urge new traders to consider the disadvantages below:
- It is impossible to simulate trading psychology, the most defining attribute that separates profitable traders from those who face losses.
- Manual trading results in a demo account will differ from results achieved in live trading.
- A demo account creates a misleading sense of accomplishment and false confidence.
- Most traders use a demo account and believe they learned how to trade, then make a deposit and lose money using the same approach, as trading psychology now takes control.
- Many brokers do not offer traders the option to select a preferred account balance that reflects their desired deposit size. It adds to misleading trading results.
MT4 and MT5 Demo Accounts
The renowned MetaTrader 4 (MT4) and MetaTrader 5 (MT5) platforms offer demo accounts as a means for traders to practice trading and test-drive forex strategies risk-free. Demo accounts mimic real-world market conditions, enable account holders to learn how to perform technical analysis successfully, and execute orders using real-time quotes, charts, and trading tools.
With MT4 or MT5 demo accounts, traders can benefit from all the MetaTrader platform services, including copy trading. Signals and Expert Advisors from the MetaTrader Market are also available for demo accounts.
Traders can open a demo account using the MT4 and MT5 desktop platforms or mobile applications.
What Are the Differences Between a Real and a Demo Account?
While Forex demo accounts try to simulate live trading conditions, traders will never experience them. Traders must comprehend that no simulation will expose them to the aspects of successful trading.
The primary differences between live and demo accounts are:
- No exposure to trading psychology, which separates up to 90% of unprofitable retail traders from profitable ones
- No slippage, profits, and losses, as no actual trading occurs
Noteworthy:
- Traders often face immediate live portfolio losses after profitable demo trading due to the relationship between trading psychology and how it influences trading
Forex Paper Trading Platforms
Forex demo accounts are available from most trading platforms, including the industry-leading MT4, its successor MT5, and its primary competitor, cTrader. They all allow traders to customize their Forex demo accounts. Other third-party trading platform providers usually have demo accounts, but some proprietary solutions may lack a demo account, which depends on the Forex broker. I recommend avoiding a Forex broker who does not offer demo accounts.
Bottom Line
Forex demo accounts are available to all traders and fulfill a necessary service. Successful traders test and tweak strategies, algorithmic traders test and bug-fix their trading solutions, tweak parameters, gather data, and compare results. Copy traders evaluate signal providers, and beginners can incorporate educational lessons while learning how the trading platform functions.
Therefore, Forex traders should customize their demo account balance and leverage settings to reflect their planned live portfolios to improve the reliability of demo trading results. While Forex demo accounts try to simulate live trading conditions, they can never completely recreate the experience, and the absence of trading psychology is something beginners must consider when using demo accounts.
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