What Is a Demo Account & How to Open One for Free?
What is a Meta Trader 4 demo account ?
It is actually very simple, a Meta Trader 4 demo account, which can be also called a Forex practice account, is a trading account where you can trade with virtual money. There are many reasons to have a practice account and it is highly recommended to create one if you haven't got one already. In this guide, you will see why you should open a practice account and how to create a demo account to use with Meta Trader 4.
Why Demo Account?
Working on a Forex demo account brings many benefits to the trader.
Here are some of the most important ones:
Virtual money — a demo account is loaded with virtual money, so that you can experience trading without risking your real money and savings.
Check your broker — usually brokers provide the possibility to open a demo account. This will allow you to test the broker's settings and conditions. For example, connection speed, margin, limits, features, and support.
Test your scripts and expert advisors — before running a script or an expert advisor on a real account, it is recommended to test it on a demo account to check that the behaviour is as expected. No one wants an expert advisor to run amok and start opening and close crazy orders with real money. Running on a demo account first will help to find bugs in the code.
Test your strategy — assume that you have a new trading strategy; before using it with a real account, you will probably want to do some back testing to check if it was profitable in the past. You probably want to test it with the current market condition as well — you can do it with a demo account and see if the strategy performs well.
Why NOT Demo Account ?
There are some differences between a Forex practice account and a live trading account. The most important ones are:
Trading psychology — is different. Trading with virtual money is not the same as trading with real money — you don't feel the same risk, hence the psychological reaction and discipline cannot compare between the two.
Historical data is limited — with some brokers, in a demo account, you will not have available the same historical data as in a live account. Usually, you can find only a few weeks or a few months worth of data. This means that you will not be able to back test your strategy on a long period of time.
Trading execution may differ — a demo account has the same settings as a live account in terms of margins and limits. However, it is usually hosted on different servers. This can cause a slightly different behaviour in the execution of orders, e.g., delays.
Despite the existence of some differences, there is no real reason not to open a demo account, so read further and see how easy it is to open one.
To open a demo account, you will be asked to enter some personal information like, name, surname, contact details. No credit card or bank details are required. As mentioned before, demo accounts are free.
You can open multiple free demo accounts with an MT4 broker of your choice.
How to Open a Demo Account?
These days nearly all brokers allow you to open a demo account. They invite you to try their services with the hope that you will then open a live trading account.
If you haven't installed Meta Trader yet, please read our guide
Once the installation is completed, you will be asked to connect to a server like on the image below.
If you already have a demo account with your broker, you can click Cancel and right-click the Account in the Navigator panel, then select Login to Trade Account. If you wish to create a new demo account instead, click Open an Account.
To create a demo account with a broker, you might have to go to their website and fill some basic registration form. Usually, you will then receive your demo account credentials via email.
You will be given the login, password and server to login to the demo account from the Meta Trader 4 platform.
Now that you have created a demo account, you can start trading and testing your strategies, and MQL code.