All about Forex demo accounts

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    Omoare Allen
    Keymaster

    The foreign exchange market, Forex, is an international financial market which offers attractive investment opportunities. With such volatility of currency valuations, trading conditions on the Forex market change dynamically.

    On one hand, this is beneficial for investors because you can earn money on the Forex in a short time, but sudden changes in exchange rates can generate large losses for traders. Losses will be all the greater if the investor decides to trade with leverage. Before you start to put your own funds at risk by assuming long or short Forex positions, you may want to gather relevant know-how first. How? With the help of Forex demo accounts.

    What is a Forex demo account?

    A demo account is used for trading on the Forex and CFD markets. It can be used with most trusted brokers on the Polish trading market. They offer secure demo accounts with no obligations. A demo account reflects the broker’s real account. Most often both account types have the same functionality, and the difference is that with a Forex demo account, the client transacts with virtual funds in order to buy or sell on the market, whereas with a real account, the funds are the client’s own.

    This is why novice users of demo accounts practice assuming positions on the Forex market without incurring any risk of losing some or all of their funds allocated to trading on the international foreign exchange market.

    The main purpose of demo accounts is to allow new traders to try out how to play the Forex and how to trade. Using a demo account is also a way to try out the cooperation with a broker and get acquainted with all aspects of operation of a specific trading platform.

    Why do I need a demo account on a Forex platform?

    With demo accounts on Forex trading platforms, you can gain invaluable experience in investing in currency pairs traded on the Forex market.

    The broker provides the client with virtual funds on the test account with which to freely trade and thus learn how to trade on the Forex, assume appropriate positions, use the Stop Loss or Take Profit levels. Above all, however, a practice account lets you see how leverage works. To many novice traders, it may seem to be a magical way to multiply their profits. Indeed, with the help of a leverage, you can earn much more by investing relatively small amounts. A leverage multiplies any position assumed by a trader even by 1:30. This means that if you open a position on one of the currency pairs with a value of $1000, it may be worth up to $30 000 with a maximum leverage. This is the amount you transact with, and should the exchange rate change by rising only 1¢, you earn 1¢ per $30 000 instead of 1¢ per $1000 – i.e. $300 in total instead of $10

    Do I have to pay for a demo account?

    In general, demo accounts on Forex and CFD brokers’ trading platforms are provided to their clients free of charge. There are no expenses for you to pay in order to create such account or monthly user fees.

    Free testing is an option advisable for any trader who has never before invested in currencies or CFDs. Demo account is free of charge, it lets you get to know the rules of the Forex market without risk to your capital, and also test investment strategies that may be a way for traders to generate stable profits in the future with the use of a real brokerage platform account

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