| Updated: October 23, 2025Advantages of Using a Demo Account
This lesson will cover the following
- Why should you use a demo account?
- What is a lot?
- Why is reliable support important?
- Why should trading on demo accounts be kept as close as possible to trading on live accounts?
In this chapter and the next, we will talk about the different platforms brokers provide and why it is so important to take your time and choose the most suitable one for you. And what better way to make that decision than to test them for as long as you like, for free, using a demo account.
Why should you use a demo account?
Trading is not child’s play. While it offers unlimited opportunities for profit, it also involves a great deal of risk, and, as brokers typically warn almost everywhere, when it comes to leveraged products losses may exceed your deposit. That is why traders who are new to Forex should take advantage of brokers’ offers to test their platforms and practise for free through demo accounts.
There are many different brokers, and, as we already said in article 8 “Forex Brokers and Where They Fit in the Market“, they are the link between users in the Forex market and the liquidity providers, facilitating trade via their trading platforms.
The trading platform is what the user sees and experiences during their everyday trading sessions. Some brokers have the capital to develop their own proprietary trading platforms, some use white-labelled products which they customise, and others simply buy a licence to use a platform as it is, such as MetaTrader by MetaQuotes Software Corp.
Given the great variety of brokers and the even greater number of platforms, it is strongly recommended that you familiarise yourself with the features and quality of each platform by trading with play money before committing real funds.
- Trade Forex
- Trade Crypto
- Trade Stocks
- Regulation: NFA
- Leverage: Day Margin
- Min Deposit: $100
First and foremost, each trader must familiarise themselves with how an order is placed on the new platform. In most cases, users enter a long position in a currency by clicking on the “ask” quote, or buy button, in a pop-up window, while a short order is placed by hitting the “bid” quote, or sell button. This method is illustrated in the following snapshot of FXCM’s web trading station.
Some platforms, however, also allow you to place orders directly by clicking on the chart. In FXCM’s web-based platform, this is done by clicking the right mouse button and selecting the type of order you want to place.
Meanwhile, some platforms allow you to choose whether you want to place a limit or a market order after the quote ticket pops up, while others require you to do that in advance.
Other key points with which one should become familiar are the spreads, the lot sizes you can trade, and how to set a stop. Spreads can be fixed or variable. In article 8 “Forex Brokers and Where They Fit in the Market”, we described the types of brokers and how they determine whether spreads remain constant or fluctuate.
Lot size
Determining the lot sizes you can trade is also very important, especially for beginner traders. A lot represents the minimum quantity of an asset that may be traded in a single order, which means that the bigger the lot size, the greater the risk exposure.
The lot system is used to standardise price quotes. This standardisation allows every investor to determine exactly how many units they are buying with each contract and to assess the price per unit.
In stock trading, for example, each contract, or lot, consists of 100 shares, also known as a “round lot”. Any number of shares less than 100 (i.e. 1-99) is called an “odd lot” and is not posted in the bid/ask data on exchanges.
Any number of shares that is greater than 100 but not a multiple of 100, e.g. 334, 876, 475, is called a “mixed lot”. Mixed lots are generally traded as round lots and the remaining odd-lot portion of the order is cancelled.
In Forex, currency pairs are usually traded in standard lots, mini lots and micro lots. Standard lots consist of 100,000 currency units, mini lots of 10,000 and micro lots of 1,000 units. This means that if you go long with one standard lot on EUR/USD at the $1.3000 ask price, you will purchase €100,000 while paying $130,000 in exchange.
In each pair where the U.S. Dollar is the counter currency, one pip of price movement will equal $10 in a standard lot, $1 in a mini lot and $0.10 in a micro lot. This is why beginner traders are generally advised to trade using mini or micro lots, as a losing position will generate a smaller loss. This, of course, means that platforms which allow traders to switch and mix lots have a competitive edge, as they are more flexible and overall suitable for beginners.
Reliable support
Another feature of significant importance that a newcomer should test is how responsive and helpful the support team is. As in any other business, the support office is one of the most important departments and will assist you with lost passwords, technical issues, and problems with depositing or withdrawing money. And, since the Forex market is decentralised and operates around the clock except at weekends, it is vital that your broker provides support accordingly.
Apart from some brokers offering you the possibility to start a chat and ask questions within the platform, most reputable Forex dealers also maintain call centres, where operators can help you if, for example, your internet connection goes down during a trading session.
Keep it close to real
And last but not least, when trading with a demo account, a beginner trader should always try to act as though it were a real account, so that the transition to real funds goes more smoothly later. You should always keep the risk at levels you think you can manage, as if your hard-earned money were at stake.
You should also start a demo account with roughly the same amount of funds you would deposit in a real account. Some platforms allow you to trade with as much as 100,000 demo US dollars, which can lead to orders of millions of currency units when you add leverage. If a beginner trader gets used to such huge numbers on a demo account, this could lead to excessive risk-taking when scaled down to a $5,000 or $10,000 live account, as they would have lost their sense of proportion.
You must also bear in mind that although people’s risk appetite varies and everyone accepts losses in different ways, each person hates to lose money. This means that someone might feel relatively okay about losing $100,000 in a demo account but could become highly agitated when losing as little as $50 of their real money.
After completing the initial 30-40 trades in order to get used to the user interface, a trader should then focus on finding the strategy that suits them best. Through practice with play money you can decide whether you are an aggressive short-term trader who uses high leverage and enters many intra-day positions, or whether you prefer using smaller lots and holding long-term positions, aiming for big price movements over the next month.
However, no matter how good the results your strategy yields, you must always bear in mind that trading with a demo account is very different from trading real money. This means that even if you achieve success when practising, this does not guarantee profits after switching to a live account. Nevertheless, professional traders agree that if you can’t be successful with demo money, you will certainly not make it in the real market.