Are Forex demo accounts rigged? There is a great debate in the foreign exchange market as to whether you can use a free Forex account to learn the ropes before going all out.
In short, no they are not rigged but less reputable brokers can manipulate them to give the impression that you are doing better than you are. Professional, regulated brokers like eToro and IC Markets make things as real as possible but there will never be the emotional response that you get using your own money compared to the “Monopoly Money” that a demo account gives you.
Forex accounts give you a chance to test your strategies by giving you an account to trade with. Many brokers provide free trading accounts. This gives you a very nice way to see how your strategies work without having to spend money up front.
However, when you first open a Forex account there will usually be a “demo account” that allows you to trade using a dummy currency. This makes it easier for you to see how much your strategies are working and how the Forex market actually behaves.
The problem comes when you decide to change your trading strategies and sign up for a full blown demo account. This is when some brokers will offer you a very high account deposit in exchange for you opening a demo account. They will then start to push you into buying and selling their strategies right away. This is a great way to learn their strategies, but it can also make it hard to distinguish between good ones and bad ones.
What you want to do is look carefully at a broker’s terms of service and look for the line about using a demo account before you get one. If you find that this isn’t the case, then you can safely assume that the demo account is being rigged for one reason or another. It could be that the broker is trying to make a profit on you by using your inexperience.
If that’s the case then you should just stay with a demo account instead and learn more advanced trading techniques from a reputable broker like IC Markets or eToro. If not, then you should seriously consider finding one that doesn’t charge for your account. You’ll be able to trade for free with the account you already have so you’ll be able to learn more about trading in the FX markets and how you can make a profit with a better strategy.
Demo accounts are great ways to get your feet wet before you go all in with your real money account. But, make sure you do your research before signing up for one.
Before you sign up for a demo account, make sure you understand what you’re getting yourself into. Many less reputable brokers will tell you that you should use a demo account until you’ve mastered their system. This isn’t always true, so be careful about what you’re told, before you spend any money with a Forex broker. Look for brokers that are regulated by tier 1 countries like the UK or Australia.
In addition to the fact that some demo accounts may be rigged, it may also be tempting to use them if you’re new to the market. Less reputable brokers may offer you a demo account for free and not tell you the risks of using it. You don’t want to put your money into the wrong hands if you don’t have to. See the table below for the most reputable brokers that offer demo accounts.
If you use a demo account and you fail, then it doesn’t hurt your chances of making money. On the other hand, if you fail with a real trading account then your losses can be much higher. Even though they aren’t going to tell you about the risk, you need to know what you’re doing when you get started using an online broker demo account. If you start losing money, then it doesn’t take long for you to get discouraged and move on to another broker.
Before you start trading real money, you should make sure that your Forex trading systems are working for you. It may take a while before you hit on a winning combination. Even if you’re only losing a few percent of your trades, that can still add up over time.