Forex demo accounts act as free trading simulators, providing traders with plenty of practice and knowledge about the markets. Demo accounts are essential for anyone just starting out in the forex market; to enhance their understanding of how it works before committing real money. It is also a good way to understand and familiarise oneself with the trading platform and test trading strategies. Moreover, these accounts come with rich features of the actual trading platform, such as the highly robust and popular MetaTrader 4 (MT4).
MT4, known for its extensive technical analysis tools and user-friendly interface, is the standard trading platform for forex traders worldwide. It can support all trading styles with tools to manage risk efficiently. Highly customisable, the MT4 trading platform is apt for beginners to learn their way around the currency market. The MT4 demo account is a good way to understand the platform’s operating capabilities.
Get to Know and Test Various Order Types
The trading platform is vital for fast execution of trades. The more traders are familiar with the controls, the greater the efficiency in trading. Moreover, a trading platform should be equipped to support the choice of trading style. MT4 allows traders to implement strategies of all complexities. The platform supports 3 execution modes, 2 market orders, 4 pending orders and 2 stop orders.
Market orders allow immediate execution at market price. Pending orders can be planned for future execution, when the market meets specific conditions. Stop orders help to minimise losses during unforeseen market movements and lock in current gains. Traders can also learn how to use a trailing stop with a demo account.
There are many ways to place orders on the MT4 terminal. For example, through “one-click trading,” traders can place orders directly from the charts. From the “Trade” window, one can get a detailed view of the number of positions entered into, number of orders, account state, open prices and more. Having a demo account allows traders to learn to gain complete control over their trades and accounts, so that they are prepared to trade in any market condition.
Learn How to Use Technical Analysis Tools
Technical analysis allows traders to gauge market trends, study price action, predict future movements and create strategies accordingly. It is important to learn how to:
- Identify various support and resistance levels and various ways in which prices react in these levels
- Trade in different chart timeframes,
- Draw trend lines
- Place various analytical objects on the chart
- Identify different chart patterns and what they mean
- Learn the functions of various technical indicators sorted on MT4 under different categories.
MT4 allows traders to customise charts, according to their preference. Traders can not only open multiple charts of different timeframes (9 timeframes), but also create customised user profiles to group different charts for easy access. So, instead of switching between different timeframes, one can simply access different profiles for specific markets.
There are over 30 in-built indicators and 24 analytical objects for technical analysis. Charts are interactive, and traders can zoom and scroll through them to study price action in real time. Accurate analysis of market movements reduces the chances of human bias impacting trading decisions.
The Stepping Stone To Automated Trading
One of the strongest features of MT4 is that it allows traders to create, test and apply Expert Advisors (EAs) or trading robots, as they are called. The highly user-friendly and customisable MQL4 programming language allows users to create expert advisors with ease and technical indicators of any complexity. This can help traders develop many trading strategies that offers high flexibility, efficiency and functionality. Such mechanical systems can execute strategies on behalf of the trader, when the required conditions are met, negating the influence of human emotions.
Using the development environment, traders can learn to debug and test expert advisors as well. The new tester, powered by the MQL5 language, is a multi-asset tool. Traders can learn to test strategies on multiple financial instruments, simultaneously. This means they can use a single code, both for testing and trading. The entire trading environment is recreated as accurately as possible in the testing environment; all ticks are synchronised across all instruments up to milliseconds.
Another key advantage of this new platform is developing custom symbols. Strategies can be tested both on custom symbols and those provided by the trading server.
Use MT4 Demo Account to Create a Trading Plan
When traders familiarise themselves with the platform, it can be used to create the trading plan; one that would be used with the real money trading account. This is the time to experiment and see what is best for each individual trader. A trading plan includes:
- Trading Hours: MT4 can allow traders to take advantage of forex VPS services, so that trading can continue around the clock, without interruptions. However, trading hours will depend on the profit goals, trading mind set and other priorities.
- Choice of Currencies: In the “MarketWatch” window, traders can look at the choice of currency pairs offered to them by the broker. There is also information on the spreads for each tradable pair. When starting out, choosing a liquid pair, is a prudent choice.
- Trading Strategies: Traders need to adopt a trading style based on market knowledge and long term goals. Using various indicators and tools, strategies can be created and even tested, without risking actual capital. This will boost confidence as well.
- Risk Management: Risk management has to be a part of every strategy. By practicing, traders can get a hang of where to place their stop-loss or take-profit orders, so that positions don’t close too early or don’t continue for longer than necessary. These tools help minimise downside risk. It is a good idea to decide beforehand what will be the size of the positions to be traded and where will they be closed.
Another benefit of a demo account is that traders can seamlessly transition to live accounts, on the same platform. All the features remain intact, while there are additional features to help traders, such as copy trading and forex signals.