When you first start to learn how to trade forex one of the best pieces of advice is to get yourself a demo forex account.

Why Use A Demo Forex Account?

To be perfectly honest whenever you are learning something new it is always best to practice on something where you can do little damage to yourself or your forex trading account balance that’s why you need a demo forex account.

As a direct example, golfers, even professional golfers, have a practice swing before playing a stroke or go on a putting green or driving range before playing in a tournament in order to sharpen up their technique before a big game or just to generally practice their skills.

It is the same when you use a demo forex account, it will give you the opportunity of trying out new techniques or trading strategies without losing any of the money from your trading account.

Is A Demo Forex Account Free?

The other great thing is that the forex demo account comes free when you open up a demo forex account.

Another important aspect is that you get used to the trading platform. I use a metatrader 4 platform for all my trading charts and the charting package that comes with a MT4 account is second to none.

The technical analysis tools that are provided really do help you with your trading.

I have several different accounts and also different spread betting accounts that let me have a free metatrader platform to use as part of the deal for placing my currency trades or spread bets with these brokers.

There is nothing like the feeling of using hard cash for your forex trades or spread bets but as I said above you need to practice before you can effectively and profitably trade forex. Demo trading is an absolute must in my opinion, even if you are following alongside an experienced forex trader who may even be coaching you along or feeding you signals of when to place trades.

There are many types of demo forex accounts out there and two of the best are Smart Live Markets and FXDD.

How Do You Open A Demo Forex Account?

This is very simple to do and you can either sign up online or by phone. I prefer online as I will be trading  online and I would want to get a feel for how easy and intuitive the platform is before committing myself to risking money.

There is obviously some paperwork to complete or virtual paperwork at any rate.

The forex broker will want to know that you understand the risks, especially the risks associated with leverage, which is where you can be liable for more money that is in your account and when this happens it is called a margin call.

Unless you have already have a metatrader 4 platform installed on your computer you will then have to download one from the forex broker’s website.

You then have to place your funds with the currency broker that you have decided to trade with and then you are free to trade.

Using  a demo forex account is a great way to get into forex trading and is also a great platform for trying out new trading ideas and trading strategies too.

Get yourself a demo forex account and to read up on how to trade forex in a short time click here.

Demo Forex Account

Using A Demo Forex Account is a post from: Great Forex World

Let’s take the last question first. Why do brokers offer free forex demo accounts? There are two generally accepted answers: first, because their competition offers them, so they have to match that or do better to stay in the market. That seems to benefit the trader alright, so no problems there.

But the second reason is that they benefit the broker. As soon as you sign up to a demo account, you are investing your time in learning how to use that particular broker’s system. The chances are that unless you find something significantly better, you will stick with it and give them your money when you want to go live, because the alternative is going through that whole learning curve again with a new platform. So brokers may be able to get away with a worse deal on spread and other costs by hooking you in with a super cool demo account with all the bells and whistles. Watch out for that one: while not exactly a scam, it is not necessarily in your best interest.

The second thing to watch out for when you are using a forex demo account is that you do not make the mistake of assuming that demo trading and live trading will feel the same. Sure, you can use demo mode to test your system, learn how to use the platform and set up your technical analysis tools as you want them. But you cannot necessarily assume that just because you are successful in demo, you will be equally successful trading for real.

Why is this? Mainly because it feels completely different when you are risking your own money. Trading a position size of 10,000 virtual dollars may give you a minor thrill, but trading a $10,000 lot for real can be terrifying at first. It is hugely stressful when you first go live, and most people do not make their best decisions under stress.

So the biggest risk with using forex demo accounts is that you may become over confident. You could be doing great in demo mode, then transfer to trading the same lot sizes for real, thinking you cannot lose. Within a few days all of your money could be gone.

The way to avoid this is first, do not go live until you are sticking to your system with iron discipline, knowing exactly what to do in all cirumstances and doing it 100% of the time. This is just as important as being in profit. If you can do this, you have a good chance of sticking to the rules of your system almost equally well when you start forex trading for real.

Second, when you first go live, start small. Even if you have enough money to start with a mini account, open a micro to begin. Watch how you act under stress, especially when things are not going well. Do you stick to your system or do you make snap decisions? Again you can move up to a bigger position when you are acting consistently as well as being in profit, not before. This is the best way to use a forex demo account.

Forex Demo Account: Are Demos A Scam? is a post from: Great Forex World

Firstly, it is important to recognize that different platforms may work in different ways in demonstration mode. Most platforms will allow some form of testing so that you can understand how they work. But when we talk about a forex demo account, we mean a system where you have a balance of virtual funds which will increase and decrease as you trade. This allows you to test systems as well as simply getting to know the platform.

So why do brokers offer this type of virtual trading account, and should we be suspicious? Of course, they want you to be able to try out their platform. They hope that you will find it easy to use and perhaps choose their service over others for that reason. They may also hope that if you make money in your demo account, you will be more likely to invest real money with them. All of this makes natural commercial sense.

There are two things to watch out for when you sign up for a currency trading demo account. The first is whether the demo account does actually work in the same way as the real trading platform. In a few cases, it does not. Traders who are comfortable with a broker’s demo system invest money into an account only to have a big surprise, the real platform is not the same and requires a whole new learning curve. It might even be so different that a system worked out in demo mode cannot be put into practice on the live platform. So do check that out before even beginning with a demo account.

Secondly, be aware that there are some big psychological differences between trading in demo and trading for real. Beginners will happily jump into demo trading, often using high leverage and opening trades almost at random, to see if ‘it works’. Long term, this type of trading is destined to fail, but in the short term, some of those traders will profit. They could easily think that forex trading is just a matter of leaping in whenever you think prices might be about to move, without worrying too much about analysis, indicators, plans or systems. Clearly, if they switch to real trading with that mindset, they are heading for a fall.

The other problem can come up even if traders use their demo account responsibly and applying a good system with sound money management. They may not be prepared for the stress of real money trading and find that when they try to apply their system to the live market with real money, they panic and find themselves making irrational decisions.

If this happens to you, it is important not to beat yourself up. Live trading does have stresses that trading in demo mode cannot prepare you for. The answer is to start small when you move to the real market. Reduce your risk to half of what you were using in demo, or even less.

Forex demo accounts are here to stay and used wisely can be a very useful tool for the new forex trader.

Forex Demo Account : Good or Bad? is a post from: Great Forex World