News & Analysis
News & Analysis

Benefits of a MT4 Demo Trading Account

28 June 2016 By GO Markets

Share

Top 5 Benefits of a MT4 Demo Trading Account

A MT4 Demo trading account is a virtual trading account that allows you to make virtual trades with play money.  Demo trading accounts replicate Live trading accounts, but it removes the risk of losing your own trading capital until you are comfortable trading with real money.

Most Forex brokers now offer a trial period of their Metatrader 4 demo account to those who want to familiarise themselves with a trading platform. A Demo trading account is an ideal way to learn about a platform and how to place and manage trades. In a way, a Demo trading account is your ‘L’ plate when you’re just starting or learning to trade.

At GO Markets, we provide the MetaTrader 4 (MT4) platform for a trial period of 30 days.

In this article, we will outline the major benefits of using a Demo trading account before going “Live”.
These benefits include:

01. A Demo Trading Account is Free 
There is no cost to download and access a Demo trading account from your broker. The only thing you need to provide is your name and email address and other relevant contact details. This is to make sure that you can also get support from your FX broker or provider in case you have any question about the Demo trading account or the platform.

02. Theory Into Practice 
If you’re new to FX trading, there is a lot to learn, especially about the mechanics of how an FX trade works. For example, you need to know the different lot sizes, what is leverage and how you can use it for your trading, margin requirements, order types, and stop losses. Using a Demo trading account is the best way to put what you have learnt into practice. This will help you gauge your level of understanding before you commit real money. Gaining any level of confidence in FX trading, no matter how small, always begins on a Demo trading account.

03. Familiarise Yourself With The Trading Platform 
If you’re a new trader, one of the most important things to do is to familiarise yourself with a trading platform. This is because a trading platform is your vital tool to execute your trades. The more familiar you are to your chosen trading platform, the better and more efficient you could be with your trading. You also have to consider that different Forex brokers offer different trading platforms. So, it is important that you choose a trading platform that suits your trading style.
Alternatively, if you’re an existing trader and you’re moving from one broker to another, you may be required to use a different trading platform to one that you are used to.  Once again you will need to familiarise yourself with the new platform.  This process may take time, and a Demo trading account is the best way to get used to a platform without making costly mistakes.

04. Testing a Trading Strategy 
There is a saying that goes, “Plan the trade, and trade the plan.” Planning your trades and sticking to your trading plans are vital if you are set on becoming a successful trader. However, it could be easier said than done. Planning your trades and executing your plans accordingly takes time and discipline. And this is where a Demo trading account could be helpful as you need time to develop and adjust your trading plan and strategy.
So whether you are trading manually or using an Expert Adviser, it is best to test your trading strategy on a Demo trading account.  A Demo trading account allows you to test and refine your trading strategies without committing real money until you are happy with the results.

05. Testing Trading Tools
Most brokers now provide additional trading tools as a value add to their trading platform. For example, GO Markets provides the MT4 Genesis, which is a comprehensive suite of trading tools.  Before using any additional trading tools, it’s highly recommended to test them out on a Demo trading account.  This will help you become more familiar with the tools and determine which ones are the most suitable and helpful for your trading needs.

Considering all the benefits we’ve discussed, one thing to remember is that a Demo trading account does not fully prepare you for when you decide to trade for real. Despite all the benefits of Demo trading, it’s also important to note, that there are some drawbacks.

» Different Trading Psychology – No matter how long you practice on a Demo trading account, there is no substitute for Live trading. The main reason is the different psychology when using a Demo trading account compared to a Live trading account.
Your mind acts differently once you are no longer practicing with “play” or “virtual” money, and you start trading with your hard earned cash.  Where you may have traded larger lot sizes on a Demo trading account without too much concern, it may be harder to pull the trigger on a Live trading account.  Where a losing trade did not matter so much on a Demo trading account, it may be harder to accept a similar loss on a Live account.  You may have been confident of your trading strategy on the Demo trading account, but now you’re about to go Live, you’re not so sure.

» Risk Management – When downloading a Demo trading platform, beginners can choose how much virtual money they can play with. If the Demo trading goes well, this could easily lead to a false psychological expectation that placing large trades and making large profits is easy. This leads to poor risk management practices that can carry over to Live trading.  This usually leads to a poor trading performance.

 

Demo trading is an important part of becoming a successful trader.  To get the most out your Demo trading I suggest the following:

(1) Hone your skills and refine your trading strategy, and most importantly, learn from your mistakes.
(2) If you intend to eventually start trading a Live account with a minimum balance of $500, open a Demo trading account with $500. Choose a starting balance on your Demo trading account similar to an amount that you would start on a Live trading account.
(3) Treat Demo trading as if it’s the real deal. Try to feel all the emotions of trading – how it feels to have both winning and losing trades.
(4) Stick with Demo trading until you are confident enough to trade Live.

At GO markets we offer a 30-day trial of our MT4 platform to both potential.  Please click here to start your trial period today.

Clients who open and fund a Live trading account with a minimum of $200, are able to get access to a “non-expiring” Demo account.  Please click here to proceed with a Live trading account.

Please note that trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. You should only trade if you can afford to carry these risks. Our offer is not designed to alter or modify any individual’s risk preference or encourage individuals to trade in a manner inconsistent with their own trading strategies.  See our MT4 tutorial videos here.

Rom Revita's Profile Picture
Rom Revita  |  Sales Manager

Rom is the Sales Manager at Go Markets Pty Ltd and manages the day-to-day running of the Sales, Support and Marketing teams. He has been with the company since 2013 and is also one of our two appointed Responsible Managers, helping to ensure that the company follows all AFSL regulatory requirements.

Rom has extensive financial markets experience and originally comes from an equities & derivatives trading background. He has served on the Trading & Sales Desk with several large broking houses, and now specialises in Margin FX and CFDs.

Connect with Rom:    romr@gomarketsaus.com

 

Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

#Forex #ForexAnalysis #ForexBroker #ForexCharts #ForexMarket #ForexNews #ForexSignal #ForexTrading