Demo account — a trading account with virtual money. The terminal, the instruments and the sequence of steps are the same as on a live account, but you can’t lose real money.
Why do this?
A first trade almost always comes with mistakes: the wrong volume, a forgotten Stop Loss, a direction picked by accident. It’s better to make these mistakes where they cost nothing.
1. Open a demo account
You open a demo account in the same place as a regular one: in the broker’s client area or right in MetaTrader 5. When creating the account, select the demo account type.
It connects to the terminal the same way as a live account: with a Login, Password and Server. The difference is that the funds in it are virtual.
2. Prepare the trade before opening it
The steps are the same as in live trading. Before you press the button, answer four questions for yourself:
- Which instrument, and which direction — Buy or Sell?
- Where is the Stop Loss? How many points is it from the entry point?
- Where is the target? How many points away is it?
- What volume keeps the risk within my limit? If you haven’t reached the risk management module yet, use the minimum available volume for your first practice trade — right now the goal is not the calculation but the sequence of steps.
If you can’t answer any one of these questions, don’t open the trade. On a demo account, this rule is followed just as strictly as on a live one: the point of the exercise is to build the habit before real money is involved.
3. Open the trade
- Open the instrument you need from the list.
- Select the volume you calculated.
- Set the Stop Loss and Take Profit before opening the trade, not after.
- Check the direction once more and confirm.
4. Record your decision before the result
While the trade is open, write down its parameters and your reason for entering. Do this before you know the outcome: once the trade is closed, memory adjusts the reason to fit the result.
- Date and instrument.
- Direction, entry price, Stop Loss, target.
- Volume and risk in money.
- Why you entered the trade.
- What would have been a reason not to enter.
5. Review the result
Once the trade closes, answer two separate questions. The first: what was the result? The second: did you follow your own rules?
These questions are unrelated. All four combinations are possible, and each one needs to be handled in its own way:
| Result | Rules followed | What it means |
|---|---|---|
| Profit | Yes | The process works. Repeat the same sequence of steps. |
| Loss | Yes | A normal part of trading. There’s no need to change your rules because of one trade. |
| Profit | No | The most dangerous case: breaking the rules was rewarded with profit, and you’ll want to do it again. |
| Loss | No | Work out exactly which rule was broken and what stopped you from following it. |
6. Repeat several times
One practice trade is not enough: a single result tells you nothing about yourself or the system. Make several trades in a row, following the full sequence of steps and recording each one.
The goal of these trades is not to earn virtual money but to make the sequence automatic: calculating the risk, setting the Stop Loss before opening, recording the decision, reviewing after closing.
What a demo account doesn’t show
A demo account is useful, but it isn’t a copy of live trading. It’s worth knowing the differences in advance:
- No pressure from losing real money. On a demo account, it’s easy to wait calmly for the Stop Loss to trigger; with real money, it’s harder.
- Execution may differ. On a live account, the execution price doesn’t always match the requested price, especially in a fast-moving market.
- Account conditions may differ from the account type you open later.
Check yourself
On a demo account, you opened a trade and realized you forgot to set a Stop Loss. The trade closed in profit.
How should you review it?
In short
- A demo account is the place for your first mistakes.
- The sequence of steps on a demo account is exactly the same as on a live account.
- Set the Stop Loss before opening the trade, and calculate the volume in advance.
- Record your decision before you know the result.
- Evaluate the result and rule-following separately from each other.