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Trading

Benefits of practicing on a margin FX demo account

Pepperstone
Pepperstone
Trading Guides
23 Aug 2022
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Learning the ropes

You have decided that you want to learn and trade margin FX and are wondering what to do first. A margin FX demo account is a great place to start.

Different brokers offer different trading platforms. This may be the Meta Trader 4 or 5. The cTrader platform, that is superb for automated trading, or perhaps direct trading from the popular TradingView charting platform.

You may try multiple platforms and decide which is better suited to you.

What is a demo account?

A margin FX demo account stands for a demonstration account.  In most cases, it will offer the same functionality of a live account. The main difference is that it is not funded with ‘real money’.

The common starting amount for a demo is ten thousand dollars or a currency of your choice. The trader can then use these funds to practice placing trades and using the different aspects of the platform.

 You might want to place a trade at the current price, or ‘at the market’. Perhaps you might want to sell a currency cross at a higher level, practicing a limit order.

Preview

Figure 1 demo account

Advantages and disadvantages of a margin FX demo account

Trading a margin FX demo account has many advantages. As well as placing trades you can try out a trading system without the fear of losing money. This is like a ‘try before you buy’ option. Why risk real funds until the system has proven itself?

The main disadvantage of trading a margin FX demo account is that it will not offer you the same mental state you may have when trading with real funds. The emotions most associated are of "fear and greed."

There are numerous books written on trading psychology. This is the ability to not get mentally attached to a trade. Many a trader’s downfall!

Ready to trade?


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Risk warning: Trading CFDs and FX carries significant risk. Trading OTC derivatives may not be suitable for everyone so please ensure that you fully understand the risks involved and take care to manage your exposure. You have no ownership of the underlying asset. Pepperstone Financial Services (DIFC) Limited does not issue advice, recommendations or opinion in relation to acquiring, holding or disposing of OTC derivatives nor is Pepperstone a financial advisor. All services are provided on an execution only basis. Pepperstone Financial Services (DIFC) Limited only provides information of a general nature and does not take into account your financial objectives, personal circumstances. We recommend that you seek independent personal financial or legal advice.

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