Learning Forex Trading - Why Opening a Demo Account Can Maximize Your Profits

So you have decided to enter the world of forex trading. You've chosen your preferred method, most likely an automated Expert Advisor type software package and you have researched which software you want to purchase. What next? Well you have two basic options. Option one, jump straight into live trading and see what happens. A natural response if you are feeling optimistic, and why shouldn't you? After all the software works doesn't it? All those results that the vendor showed you demonstrated that perfectly. Well actually, most of the results you are shown are probably the result of back-testing. This doesn't necessarily make them wrong or inaccurate but we must understand that the trading rules have probably been specifically optimised to ensure the best possible results for that particular data set.

The second option is to open a demo account with your broker. What this allows you to do is effectively test drive your chosen software without the risk of losing any money. The first thing to recognise is that a demo account is a simulation of the real thing, and to make your experience as realistic as possible you need to look for three key components. The first point of note is to ensure that the platform that hosts your demo account of choice is compatible with your software. An obvious assumption perhaps but it is important that you get into the habit right from the beginning of taking nothing for granted and making sure you do not become the victim of costlier assumptions farther down the track

Secondly, you want to look for an account that allows you to trade on margin. This is the only real way to trade as an individual trader, using your own sources of capital, so it is important that you get a feel for this. It can be a daunting experience for some to gear their investments into a much larger trading position. Start small and always have sufficient funds to cover your position. As your funds increase, you can increase your position to match and begin to enjoy larger and larger profits per transaction. Get into the habit of respecting your broker and ensure you always respond to losses quickly by making sure that your position is always covered. This means having enough cash to pay your debts.

Thirdly, you want an account that allows you to trade using real-time exchange rates. Whilst some might argue that it doesn't matter exactly what the exchange rates are but how you respond to them that matters, my personal view is that the whole point of running a demo account is to see how well you would have done in as real a simulation as possible.

Opening a demo account is a great way to test drive your software before committing to live trading. However, a word of caution must be noted here. Demo accounts are only simulations in the same way a flight simulator is to a trainee pilot. It is a whole different ball game in real life. That said getting used to margin trading and evaluating your trade set-up rules in real-time exchange rate scenarios is a valuable experience, and for my money a great way to ease your self into a profitable forex trading career.

Learning To Do Forex Trading Using Forex Demo Account

The Forex market is considered as biggest money-making option and is the largest financial market with daily turn over worth more than 3 trillion dollars. If you think about commencing your own Forex trading business, and you are not aware about the rules and strategies involved with Forex trading, you can think about opening a free Forex Demo account which you can use for practicing Forex trading.

Many online brokers at present provide certain time of real-time trading system in which traders could carry out trade round the clock on 24 hour basis from their home. There are many brokers who provide free Demo account before you open a live trading account so that you can know about Forex trading system and practice trading.

Forex Demo account will offer you the fake money that you can use for investing in Forex trading to learn the trading strategies without having any financial risk. Also, you can get access to real time Forex charts and quotes from the actual Forex market environment. If you want to learn about Forex trading, without taking financial risks in a cost-effective way, then Demo account is best choice. There are two benefits of using a Forex Demo account:

- The first reason is you can easily evaluate the user-interface and features of the trading platform or software application provided by your Forex broker. You can run the application and test its features to ensure that the functionality provided by it is applicable for your requirements. You can also find out whether the trading system is easy-to-use, user-friendly and offers the tools required for carrying out Forex trade productively. There are various types of trading systems for finding out what system will be suitable for you before you commit invest your hard money for doing actual trades in real-time market.

- Another advantage is that you can learn about trading strategies and monitor the market position with help of fake money. You can learn the method of opening of Forex positions and learn how to monitor your risk, with real-time graphs, charts and live quotes and use of Forex technical indicator's. You can also learn how you can money with short or long positions without any risk of losing your hard-earned cash. It gives you lot of time for understanding the Forex trading processing including profit calls, stop-loss limits, leveraging techniques and how you can avoid losses and make profits. You will learn how to interpret complex Forex charts of the market and predict future market conditions to invest accordingly. Also, you will practice using Forex technical indicators to improve your trading skills.

Overall a free Demo account is a great tool for beginners to learn Forex trading without financial risks and without need for help from a 3rd party.

Use Demo Account for Practicing Forex Trade

The Forex market is considered to be the most famous online business to make money. If you think about starting a business with Forex trading and you do not have any idea about Forex trading, then you can think about using a demo trading account to practice trading. The online brokers at present provide a real time Forex trading system in which Forex traders can do currency trading at any time from the comfort of their home. Since Forex market is open 24 hours through the day, you can trade round the clock unlike stock markets which are open only during day time.

Forex demo accounts provide you some practice money which is helpful for learning the skills and fundamentals of Forex trading. You can acquire trading software and install it in your computer. You can access the trading interface and get access to real time Forex charts and live quotes which take in real time environment. With help of free demo trading account, you can learn Forex trading easily with risking your actual money. There are two advantages of Forex demo account that is helpful for beginners. First, you can evaluate the user interface of trading software of platform which is provided by the Forex brokers. Most common trading platform is Meta Trader 4 platform which is offered by many brokers. There are also other trading platforms like E-Toro, Finexo, Forex yard and they are used by some brokers. You can run and evaluate the trading software and ensure whether the features are up to your expectations. Some trading platforms have live charts and many technical indicators like momentum indicators, support and resistance, candlesticks, charts and graphs which are easy to access, but some platforms will have limited number of indicators.

So, while using the trading system you must make sure whether it is user-friendly and has all required tools and technical indicators. You can try different trading systems before concluding which one is good for you. After finding the perfect trading system, you can open a live account with it and deposit real money for trading. Until then, you can practice with demo accounts and fake money so that you will suffer any actual loss.

Next advantage is that you can also learn about Forex trading techniques and know how to monitor the trends with the fake money provided. You will know how to make trading decisions and open Forex positions so that the risks can be monitored easily. It provides time for you understand profit calls, placing stop loss limits, leveraging, support and resistance, monitoring market trends etc. You will know how to prevent losses and maximize your profits. Also, you will understand about reading charts and other tools for technical analysis of Forex market which will improve your trading skills.

You can devise your own trading strategies and design your own technical indicators and trading signals to monitor the market trends. So, a demo account is very useful tool for novice traders to learn about market.

The Pros and Cons of Trading a Forex Trading Demonstration Account

Trading is a skill that takes time to learn. Think of it like Boxing it's also a skill that takes time to learn. If you get into a professional boxing ring without any training, you'll get beat up physically! If you get into the Forex ring without any training, you'll get beat up financially!

The similarities are that both the examples are Skills, and both require psychological preparation. The difference is that one is physical and the other is financial.

We can get over a physical beating usually in a few days or weeks, BUT a financial beating can be devastating and easily affect us for the rest of our lives, not only does it hurt our hip pocket but it can cause problems with our relationships and family. So when we get into the Forex ring we have to be prepared.

The Professional Boxer

When a professional boxer gets in the ring he has already been practicing in a safe environment usually for years, this safe environment is where he can make mistakes without having medical treatment. He can also spar with other opponents that have more skills and experience then he does and he learns from them. He also has someone there to watch him and give advice and guidance.

Then when he is ready, he gets into the ring and boxes for real, he's accepted the risk and KNOWS that he can get hurt, but he's also studied his opponent and done his home work, so he KNOWS he has a good chance. He can still lose this round but if he wins most of them he will take the money home.

BUT! What about the psychological side? Does he fear getting into the ring? Sometimes! But he's aware of it and he can control how it affects him in a way that is beneficial. Will he be thinking about the money he'll make? Or will he be thinking about the fight as is happens and planning his next moves during the breaks? He'll be analyzing the results from the previous rounds and making changes in his strategy for the next round.

The professional Trader

Can you see what's coming next? If so than, you've learnt to analyze what you read and form a projection into the future. (A very valuable skill for the FOREX Trader)

A forex trader, like the professional boxer, will not get into the Forex trading ring without being prepared first. He might not spend years practicing in the Demonstration Account, but he will at least have spent a month or two or three, sparing with the Forex Market in a safe environment that he won't get beat up in.

He'll practice trading forex against all the other traders and learn from them, and he'll also have someone watching him and giving advice, and guidance.

Then when he is ready, he'll get into the Forex trading ring and trade forex for real, he's accepted the risk and KNOWS that he can get hurt, but he's also studied the Forex market and done his home work, so he KNOWS he has a good chance. He can still lose on this trade but if he wins most of the trades he will take the money home.

BUT! What about the psychological side? Does he fear getting into the forex trading ring? Sometimes! But he's aware of this fear, but he can control how it affects him, in a way that is beneficial to his forex trading. Will he be thinking about the money he'll make? Or will he be thinking about the things that are influencing the market as is happens and planning his next trades while he waits for the results? He'll be analyzing the results from the previous trades and making changes in his strategy or continuing with the one that's working, and planning for the next Forex Trade.

So it" easy to see that trading with a Forex Trading Demonstration account is something everyone should do before getting into a live Forex Trading account.

The practice account will give the trader MOST of the skills necessary, to be able to trade profitably, giving them the training ring to spar in.

BUT A BIG WARNING!!!

Like the Boxer the Forex trader has learnt to manage his emotions, this is often overlooked by new Forex Traders. BUT is probably what separates the successful investor from the ones that keep getting beat up!

If you are considering getting into the Forex trading Ring, then be sure to practice first, and find all the information you can about controlling your emotions.

Fear, greed, impatience, are the main culprits of financial bashings, so keep an eye out for them, and learn how to beat them before you get in the ring with them.

Understanding these emotions will enable you to use them to your advantage in understanding the market, the market is influence by these emotions and if you understand them you can have them on your side, thus giving you an advantage.

Using a Forex Robot Demo Account

If you are new to Forex, you will definitely need some hands-on experience to get a feel of the market to be able to make wise investments. If you are worried that you will have to experiment with your own money to learn about the market and become a successful investor, put your mind at ease. Nowadays, there are hundreds of websites that not only give you a free demo account (with some virtual money in it) but also give you a Forex robot along with it to help you learn how to automate your investments.

How a demo account works:

Some websites give you a demo account with some amount of virtual currency of your choice in it. While you are shown live market trends, Forex charts, news and commentary, and you will be at liberty to invest as you like. If you choose to automate your investments, you will have to specify the market criteria that you think will be best for your investments, or let the Expert Advisor program decide by itself. You can then sit back and watch your virtual investment grow or shrink. This will help you learn about the different market conditions that can arise.

Choosing your Forex software:

After you've created your demo account, you will be given a trial period (say, 90 days) along with the trading software. The software will be a trial version, and some features will be limited. However, what it has to offer will be quite sufficient for you to learn the ropes and decided whether you like the software. It is recommended that you try out software from different companies before you make your decision. Once you have found the Forex robot that gives you the best results, you can go in for a postpaid account through which you can start trading for real.