Many aspiring Forex traders are hindered by fear of losing their money or the money of their client in a trade that goes wrong. Of course this fear is always a reality in the game of Forex trading but the lessons learned from these mistakes are priceless. Another reality though, this time on a more positive note, is that practical and technological advances have made it possible to learn these lessons while at the same time forego actual losses that can be incurred due to inexperience or lack of mental preparedness.
Forex Practice Accounts
A practice account is sophisticated software that utilizes past trader experiences and market forces in order to come up with a realistic Forex trading environment. Think of it as a flight simulator for pilots or a practical driving exam for student drivers. As a testament to the effectiveness, efficiency, and promise practice accounts hold, several of the largest brokerages have become part of the same. This is in order to train in house and freelance traders, as well as to provide enthusiasts who like to moonlight as a trader the opportunity to assess their Forex trading proficiency and skill.
Forex Demo Accounts: Finding the Perfect Fit
Before signing up for a demo account, you should already be familiar with basic trading jargon, procedures, practices, strategies, indicators, etc. It is best that you open several demo accounts in order to compare platforms as well as ease of use. Now you must select what type of demo account you wish to have.
These accounts can be classified based on the following:
- Trading Platform: There are usually two platforms available. The first is accessible online via your web browser and the second is downloadable and stand alone via your pc.
- Availability of Capital: Demo programs offer huge sums to play with ($50,000 or more). However this will easily be lost due to experimentation and inexperience.
- Practice Trading: This type of trading allows you to work with actual, sometimes real time market forces. Beginners can hone their skills on reading indicators and formulating strategies while professionals would benefit from trying out their strategy here before doing it live.
- Dummy Trades: These are practice runs on your demo account that will not impact your account stats and standing.
- Customer Support: Before signing up for a Forex demo account or upgrading the same to a paid account, try out their customer support. Make sure they are easy to reach and easy to understand. Do not settle for automated customer support or poorly trained and hard to understand representatives.
- Tutorial: A good Forex demo account provides easy to understand tutorials on strategies, basics, advance techniques, demo account user interface, etc.
Forex Demo Accounts: Rationale
Demo accounts show how much confidence investors have with the software. They allow traders and enthusiasts to sign up for free for a limited time and for a limited amount of movable capital. Inevitably, some will go around using different demo accounts in order to avoid paying for practice accounts. However, developers and trading houses have taken this into account. Their collective response is “better trained, experienced, and confident Forex traders are good for business.”