How to use a demo account properly

A demo account or simulator lets you place trades with virtual money. It is a good place to learn, but it is also easy to use badly: huge balances, enormous positions and no consequences. Here is how to make practice count.

Decide what you are practising

Practice is not mainly about finding out whether you can make virtual money. It is about building the routine you would need with real money:

• reading prices and quotes correctly;
• setting a stop and target before entering;
• calculating the position size from the stop and a fixed risk;
• following your own rules when trades go against you;
• reviewing your trades honestly.

Make it realistic

• Use a balance you might realistically trade, not the default very large amount many demos start with.
• Use the same risk per trade you would use for real. Practising with 20% risk teaches nothing useful.
• Use realistic leverage, ideally the limit that would apply to you.
• Do not reset after every loss. Living with a drawdown is part of what you are practising.

Follow a written plan

Before you start, write down a short trading plan: which pairs, what conditions you will trade, where stops go, how you size trades and when you stop for the day. Then practise following it. If you change the rules, note the date, so you can tell which results belong to which version.

Measure the right things

Record each trade: pair, direction, size, entry, stop, target, result and a sentence on why you took it and whether you followed your plan. Over a series of trades, look at:

• Win rate and average R together, not just total profit;
• maximum drawdown;
• how often you broke your own rules, and what happened when you did.

The last one is often the most useful. A winning trade where you broke your rules is still a mistake worth noting.

Know the limits

• A demo or simulator is not the live market. Fills, spreads and slippage may be more forgiving than real trading.
• Virtual money does not trigger the same fear or excitement. Many people find that their decisions change once real money is involved.
• A good run on a demo does not prove an approach works. Samples are small, and past results, real or simulated, do not predict future ones.

Using the TradingFXO simulator

The practice simulator uses simulated prices generated in your browser, not real market data, which is useful for practising mechanics without being tempted to treat it as a forecast. Try this routine:

1. Start a session with a realistic balance and leverage.
2. For each trade, set the stop first, then use "size by risk" at a fixed percentage.
3. Read the warnings and the risk:reward before confirming.
4. Play the bars, and do not touch the stop unless your plan says so.
5. End the session and read the summary: win rate, average R and maximum drawdown.

Reuse a seed to replay the same prices and see whether a different decision would have changed the outcome, while remembering that real markets never replay.

Education, not advice. This note explains a concept with illustrative numbers. It is not a recommendation to trade. Currency trading carries risk, and losses can exceed expectations. See the risk disclaimer.