Forex trading is an open activity for all who have an internet connection and some money to spare. The forex market is the largest, most liquid and most volatile market in the world. It is open 24 hours for five days of the week and has numerous participants. Participants include large financial institutions, individual traders and forex brokers who make it possible for individual and small traders to get a piece of the forex pie.
Rakuten forex is one of the leading forex brokers that enable the many retail forex traders around the world get into the market comfortably, trade and reap their profits.
Forex brokers allow traders access to the forex market by providing with two accounts. A forex trading demo and a live forex trading account.
Main difference between a forex demo and a live forex trading account
The money used in each of the account
A live forex trading account is the account that all traders use to trade the market. Usually, this account is funded with actual money and can incur actual profits and losses. On the other hand a demo account contains virtual money supplied by your forex broker.
Risk faced by the trader
A demo account is risk free. It can make a gain or loss on trades but the trader does not get to enjoy them as they remain virtual. On the other hand, a live account trader bears all the trading risk and enjoys the actual profits from the trades they make.
To learn how to trade with a live forex trading account is a disaster to the trader. A demo account is the best way to learn how to trade. A demo account accesses the market in real time just like a live trading account yet the trader has not put any of his money at risk. If a trader were to use their live trading account to learn how to trade, they would suffer innumerable financial loss and would be better off donating their money to charity.
Similarities between the forex demo and a live forex trading account
Access to the market
Both accounts have similar access to the forex market. This is the reason why the demo account is used by traders to learn how to play the market. It has virtual funds and traders face the same conditions in the market faced by live traders.
Uses the same trading software
Different brokers use different trading software. Since both the live trading account and the demo account are provided by the same broker, during your training period, you get to learn how to actually use your preferred broker’s software when you trade. This prevents you from making losses when trading live by not being competent in the use of the provided trading software.
How to acquire a forex trading demo
Acquiring a forex trading demo account is a quick and simple process. You need to visit the website of your forex broker and click on the demo account tab.
Provide the personal details you will be asked to provide. When your broker is satisfied that your details are correct and represent a real human being, they will send you access codes that you will use to log in to your account and start using it.
Important advice to all forex demo account users
With the main characteristics of a demo well enumerated, it is important to actually use it. It is advised that new traders should take at least three months to one year learning how to trade on their demo account. In this way, they will be competent and confident traders when they start on the actual trading.
Forex trading actually takes a toll on your nerves and emotions and only a long period of practice will ensure that the trader is competent. It is for this reason that one should take as much time as they need on the demo account to learn trading strategies and techniques to control their emotions to see their trades through to good profits and to exit before they lose a large chunk of their trading capital.