Trading in the Foreign exchange market (Forex) is not something you would want to do without proper education, training, and experience. This is because you are playing with either your hard earned money or the hard earned money of a client/investor. Education is of course achievable by enrolling in adequate and proper courses. But education without training and experience is just like sending a soldier to war with only a rusty bayonet against tanks and battle hardened mercenaries (you get the picture).
One way to chalk up on experience points is to enroll in a Forex demo account. This article will discuss the what, why, and, how of the same in the hopes of providing beginners and enthusiasts with better practice skills as well as provide experts with a refresher course or a new perspective on trading in Forex.
Forex Demo Account: The What
A demo account allows a trader to experience firsthand how to trade on the floor or with a broker. Demo accounts usually start off with a specific amount of money ($50,000 or more) which the trader can use in different trades. The trader is then left to work on different trading platforms by utilizing different trading strategies. These strategies are of course formulated via a controlled environment with indicators as well as other internal and external market forces. Demo accounts usually provide limited use as well as a limited amount of usable money but this is a good way to determine if practice accounts are to your liking or are worth the price.
Forex Demo Account: The Why
Trading in Forex is not something that can be memorized and scenarios in the account cannot possibly reflect real time. However the use of a demo account allows the trader to get a feel for trading. This is where a trader realizes his/her shortcomings. And realizing your shortcomings here where the money and the job are make believe is better than realizing it in the real world and on the trading floor.
Forex Demo Account: The How
Demo accounts can be found on the internet. Of course there are several providers. A good rule of thumb is to select the ones that provide demo accounts rather than require immediate payment. Sign up for several accounts and then see what is best suited for you and your price range. If you are pinching pennies then you can move from one demo account to another after expiration. However, you will have to continually learn the inner workings of different providers. If you are working within a budget then you need to consider the following:
- Referrals from reputable sources: This does not mean relatives and friends but co-workers, professors and fellow students.
- Compare prices: You can utilize comparative websites for this.
- Spreads: If you do not know what this means then you are in serious trouble! Determine the type of spreads you want to practice on and make sure the plan being offered as well as the demo you are using offer the same.