The importance of Forex Demo Accounts
Forex demo accounts are being widely used nowadays. Not only they are easy to sign up but also they are free. To get the account, all you need to do is to register your name, email address, and your phone number with an online forex broker and get started with your practice account. On one hand, this kind of account is very effective in fast tracking one’s forex learning curve; on the other hand, it develops a risky trading tendency among the traders.
Besides, the demo/practice account enables you to get the experience of trading excessively and taking in more positions which is not the case with live or real trading. Although most practice/demo accounts start with $25,000 to $50,000 in virtual money but the retail traders usually prefer to go for trading only mini and micro accounts that have committed capital of only $2k to $10K.
Are the Forex demo accounts useful for both the experienced and the upstart traders? Yes they are. On one hand, the experienced traders can use them to fine tune their trading strategies; on the other hand, the upstarts can use them to fast track their forex education. Therefore, you are strongly advised to use a demo account with the amount of capital you intend to start live trading using real money. Hence, you should tell your forex broker to limit the virtual money for your forex demo account to the amount of capital you intend to start with. By this way, you can develop your skills and prepare yourself for real-time live trading.
Start with Micro or mini accounts
Mini or Micro forex demo accounts are considered ideal to start with. There is a good reason why it is always better to start trading with micro or mini accounts. When you are using demo account, you are actually in the “getting to know you” stage with the forex market. Hence, mini or micro demo accounts are considered as the best option when you are in the initial stages of your forex learning curve as they expose you to the lowest risk possible. There are many advantages of using the demo accounts; most importantly, they make you familiar with the peculiarities and characteristics of the highly volatile foreign currency market. In other words, these accounts are a perfect training ground to develop skills and trading systems.
While using the demo account, you would be doing a lot of trades and learning many things about the forex trading. You need to keep a record of all your trades as well as note down all the reasons behind them. You should also make notes on the fundamentals and technical analysis. This practice will help you understand how good your strategy is; identify your mistakes and weaknesses etc.
Allocating your Time
Forex trading is a big market, open for 24 hours. If you jump into without having the basic knowledge and skills, you would find yourself glued to their monitors watching the market non-stop and still not getting anything. Therefore, you need to be familiar with the most basic things such as forex trading zones and the most active trading hours and schedule your trading times accordingly. Here, you must know that the busiest trading hours are the ones when the European market and North American market are both open. Such a time is considered as the most active trading time in the forex market.
Content Source: Admiral Markets – Forex Demo Accounts