It’s often said that practice makes perfect. And while no amount of practice will enable you to perfectly execute every trade, experience often makes the critical difference when it comes to success in the markets.
This is why paper trades became so popular. Originally, the practice of paper trading was simple: You took a pencil, you wrote down theoretical trades, and you tracked your theoretical returns over time. It was an excellent way to determine how “market ready” your trading skills were before risking real money.
Today, we have a much more powerful form of paper trading: Demo accounts.
Let’s take a closer look at what futures trading demo accounts are, the benefits they offer and how to open the right demo account for you.
What is a Futures Trading Demo Account?
A demo account is much like paper trading, but modernized. Instead of writing your imaginary trades down on paper, you use simulation software.
This simulation software is designed to mimic the real world experience of trading futures, options, stocks and other assets.
To use this software, traders open what’s called a “demo account” with a brokerage/trading platform. This demo account often replicates the exact tools that are offered with a real account, which allows traders to execute the core strategies that go along with the assets they trade.
What Are the Benefits of a Futures Trading Demo Account?
A futures trading demo account is your opportunity to access an exclusive and sophisticated online trading platform like no other, with integrated tools to seamlessly trade and monitor the markets. Traders can easily view market activity, place orders, and track orders and positions.
The pros of futures demo account use are several. The most significant benefit of a demo trading account is the mitigation of risk. Much like pilots use simulators to learn flying techniques, traders use simulators to gain the experience they need without assuming any risk.
The second benefit demo accounts offer is familiarity. Many traders make mistakes when using new platforms or new tools or features within trading platforms. By getting yourself familiar with all of this trading functionality while using a demo account, you greatly reduce the chance of using a tool incorrectly.
Demo accounts also can give you perspective on how emotions impact your success in the markets. Traders sometimes have the right strategy, but end up taking a loss because they could not control feelings of greed, fear or anxiety.
Learning to regulate these emotions is key for almost every successful trader. Because demo accounts do not accrue real losses, they offer a window into how well you’re managing these emotions. If you strongly outperform your actual trades while using a demo account, and this persists over time, it may be a sign that emotions are getting the better of you.
How is Futures Demo Trading Different from Live Trading?
Aside from the obvious “no risk” element, there are a few other key differences to consider:
- A futures trading demo account, or any demo account, is often larger than real money accounts, often coming with six figures in simulated money. This makes losses easier to recoup because it provides a greater cushion.
- Demo accounts usually get filled at the price shown. Live trading often has large spreads between the bid and the ask, and getting orders filled is more expensive.
- Whole orders are usually filled using demo accounts. While live trading, you may only have a partial fill at your preferred price.
Are Futures Trading Demo Accounts Free?
Most brokers/trading platforms offer free demo accounts. However, the quality of these demo accounts varies quite widely.
It’s important to look for a futures demo account that has a full range of features and functionality.
How Do You Trade with a Demo Account?
It’s simple: Open the software/app and start trading. Many demo accounts look more or less identical to real money accounts. Most trading platforms have resources to help explain everything you need to know about each element of trading.
Can Demo Accounts be Used for Day Trading?
Absolutely. In fact, day trading is one of the most popular reasons to use a demo account or simulator, given the significant role that experience plays in day trading success.
What Makes RJO’s Futures Trading Demo Account Unique?
RJO’s demo accounts come with industry leading features that help you master the fundamentals of trading while managing risk.
Our demo accounts are superior because they offer such deep functionality. This ensures that users are familiar with every tool they need to use before trading actual money.
RJO’s core features include:
- Free 100K simulated futures trading demo account with live market data & execution
- Click N’ Trade – one click trading from charts, price ladder (DOM) & order ticket screens
- Click N’ Drag – cancel/replace orders without typing
- OCO orders with GTC capability
- Alerts based on price, study, or time can trigger order placement
- Options window with options calculator and ‘what if’ scenarios
- DOM Trader (price ladder)
- Major chart studies – moving averages, volume & open interest, RSI, Oscillator, DMI, etc.
- And much more!
If you’re interested in learning how to trade futures, we urge you to try our free futures trading demo account today. It’s a risk and commitment-free way to learn the basics of futures trading.