Using a Forex demo account is the first step towards becoming a Forex guru. The fact is that you CAN’T try trading on a real account for your first time, especially if you’re still not sure how the Forex market works. This is why demo accounts are created – to provide would-be traders with a chance to practice their skills without putting real money on the line.
What is in a Forex demo account?
Since the account is meant to simulate a real trading experience, the difference between a demo and the real account is practically zero. Traders would be given access to spreads and allowed to trade their money as they see fit. The money is “virtual” which means that even if they were lost, users wouldn’t owe anything. The demo account itself is free and provided by online brokers to get traders started in the industry.
Try Out All Trading Strategies
Considering the fact that the Forex demo account is not sporting real money, traders are advised to take thorough advantage of this setting. Use this opportunity to try out several trading strategies to find out which one works best for the user. This can also be an excellent avenue to test out theories and have them confirmed before being applied.
Study and Learn
Don’t miss the opportunity to study the actual numbers and their relation to each other. Utilize technical analysis and find out if there is any relationship between variables. For example, what are the quantitative data that signals the best time to open and close? Although simulated, the numbers are fairly accurate and could provide excellent information in real-world setting.
Customize if Possible
Although being able to cope with the simulated amounts of a demo account is well and good, traders are advised to go farther than that. Some accounts make it possible for traders to personally set up the figures making up the market situation. In fact, some traders change the values to reflect actual numbers in the Forex market. This allows them to better anticipate what would happen in the actual setting and make predictions based on real numbers.
Test Out Robots
Experienced traders use their Forex demo account to test out interesting robots. These robots are capable of automatically trading based on the preferences of their user, allowing them to earn money without physically being online 24/7. Robots can malfunction though, which is why they are used on demo accounts first for safety purposes. Only when they have proven to be effective are the robots transferred to the actual account.
Open Different Demo Accounts
Considering that they are free, make sure to open up several demo accounts. This should provide a more extensive field for study.
Of course, traders are expected to practice as much as they can before handling an actual account. Note that it isn’t necessary to close a Forex demo account once a trader opens up a real one. In most cases, traders can come back their demo and use it as a “testing” site for any ideas they may come up with.