Demo Account
Before novice traders can begin trading the live market, a beginner trader should look for a practice trade account which is oftenly known as a demo trading account. This demo trade account practice trading account is provided for free by brokers & therefore also referred to as free demo trading account - Demo MT4 Practice Account.
This free demo account for beginners is provided to beginner traders for purposes of practicing their strategies & indices techniques as they learn how to trade the online market. This practice account for beginners also allows the beginner traders to practice on the platform software that they will be using for online trading that is known as MetaTrader 4 software until they become familiar with its operation, as well as the execution of stock transactions using the MT4 software and how to navigate the MT4 platform and the charts that are within the Meta Trader 4 platform.
Demo MT4 Account Practice Demo Account - To start learning trading using demo online practice accounts, novice traders need to begin with a demo trade account, these demo trading accounts are similar to the real accounts in terms of the actual software as well as execution conditions of orders, the only difference is that for a demo trade account - a trader does not need to deposit any money when it comes to the demo trading account. The money used in the beginners demo trade account is virtual cash, and it is not real money: beginners demo practice account is used to simulate real money trading without risking money.
Online Practice Demo Account - Learn Trading Software with a Free Demo Account
The demo account will have a virtual balance of $5,000 or $10,000 or $50,000 or $100,000 & a demo trader can choose the amount of capital they want to practice trade with. The demo account example shown above the virtual balance of $100, 000 as shown above on the MT4 Transaction Window & a beginner trade can use this $100,000 dollars virtual balance for practice trading - Demo MetaTrader 4 Account Demo Practice Account.
Remember the demo account is a free account and because learning might take some time, brokers provide this as a way for beginner traders to study stock indices trading & begin without depositing real money.
Beginner traders should also look for an unlimited time practice trading account to ensure they get enough practice time until they're ready to invest in the live market.
Main aim of the practice account is to allow to beginners access the real market as other traders who participate in the online market with real cash, only that the difference is that money used in a practice account are virtual funds which are risk free, but everything else, from the platform, trading order execution, spreads & trading price movement are the same as of those traders transacting the live market.
As Indices popularity grows and more financial instruments are introduced to be traded, these demo trading accounts can also be used to practice online trading on these new added financial instruments.
Commodities: GOLD and SILVER
Futures: CORN, WHEAT, SBEAN
Energies: NGAS, OIL
Stock Indices: DOW, NSDQ, SP, NK,DAX, FTSE, SMI, ESX50 & CAC
These financial instruments that are also gaining popularity in the online spot market, can now also be traded on the online demo account demo practice account - Demo MT4 Practice Account. These financial instruments are popular because they are used to hedge investment trades as well as provide additional financial instruments that can be traded online so as to diversify the portfolio of investors and online stock traders. These financial instruments are traded like this; when there is not enough liquidity or volatility in market then investors & online traders look for this liquidity and volatility in these alternative financial instruments. The popularity of these financial instruments also means that these financial instruments have also developed trends that can be analyzed.
This type of demo account is meant to serve the following purposes in indices:
Learn Software
The first thing that a demo account is supposed to do or is supposed to be used for is to study the ins and out of the software that your broker uses, a good example of a software is MT4 platform. Once you register for a demo practice trade account with a online broker and download their trading platform software, you'll need to train on how to trade using the platform you have downloaded. Learning to operate this software is especially crucial for beginners who don't have any knowledge of the market. If a beginner trader were to begin directly by investing with real money without knowing the working of a trading platform they can easily make a mistake by pressing the wrong button key or placing the wrong trade order by mistake without even knowing.
Learn Order Execution and Setting Trade Orders
New Traders won't know the difference between a limit order and a stop order, new traders will also not know when to buy or sell or which chart setup to buy and which chart setup to sell, therefore, the need to start with a practice practice trading account until the time that they get to know when to buy & when to sell.
Test Your System & Strategies
A demo practice trade account is a perfect ground for testing your stock system & strategies, As a beginner trader the first thing you need to have before you start trading online is a system that's based on indices strategies. After coming up with your trading system you will use this beginners demo account to back test it or what was anciently referred to as paper trading, this practice account is similar to the paper trading method only that it does not use pen & paper but the technique of backtesting is what is similar to that of paper trading method.
Until the time you start winning more on your practice stock trades only then - you can then consider to invest in your real account. Starting with $1,000 or more is recommended, it's best to save your money upto at least $1,000 dollars that way you've a fair chance of succeeding as you will not make the number 1 mistake in indices: under capitalization. In fact the more well capitalized your trading account is the better, you can start with $5,000 dollars, $20,000 or $50,000 - just make sure you have enough capital to begin trading with.
Ask yourself why most free demo accounts are set at account balances of $10,000 or $50,000 because the more well capitalized a trading account is better the chances to succeed, because these accounts won't be undercapitalized.
Trading Practice
This demo account - free practice account is a type of account offered by online brokers as a way to introduce new traders to their trading software platform & methods of orders execution. This where you practice until such a time when you can make profits on this demo account and then afterwards you can trade the live market.
The free demo account for beginners is a great way to get started and learn the specifics of online trading with no risk of losing money and at the same time get to know the execution methods of orders and test various strategies for free.
Using a beginners demo practice account is the best way to gain knowledge on how the market works & to help you in the understanding of the actual trading process. A good trading software platform to use for opening a demo account & trade with is the MetaTrader 4 software which is simple to learn, the learn MT4 platform tutorial section which also includes the how to use MT4 demo account tutorial is also provided here on this Learn Trading Website, under the right menu you may want to read the how to use MT4 tutorial before opening a platform.
By using demo trading accounts, a beginner trader has the opportunity to learn executing trade transactions without risking their own funds. The broker will set up a practice account for you for free so that you can test their trading software, their execution - execution is considered by most investors and traders as an important aspect when choosing a trading broker, No Re-quotes Execution Policy is the best execution method of orders, many order requotes will mean sometimes investors not getting their orders executed, or if the orders are executed/filled they'll be executed at a trading price that is not better than the one previously quoted plus the fact most online traders just hate being requoted. Imagine trying to place a order instead of the order getting executed instantly you get re-quoted, then you have to place another confirmation order, if you get requoted 5 times you will have to place 5 other confirmation orders, plus the original order. A No-Requotes Policy for order execution is the best option to choose from.
There are many advantages of using an online demo trading account, biggest advantage is having time to figure out how each platform works, how to navigate the software & know what each function does. On top of that you can use the online demo account to test your strategies to see if they work before moving to the live market.
Many beginner traders find that by putting the knowledge on this learn site to work on a free practice account, they get a clearer grasp of what to look for before, during and after each transaction. These learn tutorials are aimed to teach every aspect of online trading, most beginners just learn about; a indices system, how to generate signals & then begin investing on the real market, well it takes these beginner traders less than a month to lose their invested equity. After all these novice traders did not study about indices equity management topics under key concepts tutorials, neither did they study about indices draw-down and maximum draw-down, and the best of them all LEVERAGE. If you have no idea what leverage is do not open a real account til you do.
Even the experienced investors & traders will also test the demo trade accounts of other online brokers, especially if they want to change their trading broker. This is done so as to help them get to know more about the execution of the new trading broker & also study the new software of the new trading broker. Nowadays most traders just learn one platform, the Meta Trader 4 platform, which is provided for download by all brokers for free so when a trader moves from one broker to another they'll still use the same platform without need of learning a new software all over again.
The purpose of demo account is to familiarize the beginner trader with the various methods of analyzing chart trading price movements and orders execution - it provides beginner traders with examples of how the market works without the risk of losing cash. A beginner trader can also learn how to execute orders and how to analyze charts & when and how to open a transaction, how to read a indices quote, how to navigate price charts so that they master the various trading platform transactions before progressing to trade the live market.
Looking at the chart below a beginner would not know how to trade or execute a trade transaction if they were to start investing immediately. A beginner trader would almost certainly lose their money because they won't know what they'll be doing or which button to press. This is why all beginner traders start with a practice demo trading account provided for by their broker for free so as to practice on the platform software risk free using a practice online demo trade account before opening a live account.
Practice Account - Learn Charts using a Practice Demo
Learning the broker’s software
Because different types of online platforms are provided to investors like the ones listed on this page; all brokers will have demonstration accounts with which a beginner trader can use to learn the new software & about the various tools provided by the broker on the software.
Web Based Platform - traders can learn this software with a Practice Free Demo Account
Looking at the above examples - a trader would require to familiarize themselves this new trading software afresh before beginning to use this new stock software - an investor would then open a demo trade account & use it to learn the new trading platform.
