Are you trading Forex for the first time? Are you unaware of the basic trade strategies and moves? If yes, then worry no more! The best way to gear up for real money market trading is to open a demo account first.
What is a Demo Account?
It is an account offered by various Forex brokers for traders especially beginners and novices, to understand the platform features, experience real FX market volatility and learn some basic strategies before you step into the actual FX arena and participate in trades through your live account. It is a good way to test the waters before you the risk and put your real investments at stake.
How To Create a Demo Account?
To experience Forex trading before you step into the real money market, all you need to do is sign up with a broker by providing relevant details. The sign up is for free. Once you sign up, your request is sent to the broker and you are informed about your demo account via email. Some brokers all send educational trading materials to help traders start currency trades.
Features-What To Expect?
Most of the brokerage services that offer this facility include the following features:
• Unlimited live quotes and real time charts
• Accessibility to customer support service 24/7
• Real Forex trade data stream including live buy/sell prices, option to choose from a large variety of currency pairs
• And of course a certain amount of virtual money. Some brokers offer $50,000 for practice while some offer $100,000.
However, here what is important to note is that there is a trial duration on practice accounts. Most of the brokerage services offer a 30 day risk free practice service however, some may offer it for a span of 90 days as well.
In addition to this, through practice accounts traders trade through a stimulated market environment which means it lacks the dependence on real time market. Thus, the strategies that work perfectly in the practice environment does not mean will always work the same way in the real time FX arena. Therefore, it is just a means of exposure and learning strategies, so that when you start live trading you can interpret the currency movements and then devise a strategic plan accordingly.
Advantages of Using Practice Accounts
Here are some advantages of using practice Forex accounts for novice traders:
Practice accounts are free of cost so you don’t have to pay to learn FX trade. Using these accounts, traders can get a feel of what foreign exchange trading is all about.
It enables you to learn basic and advance Forex strategies. Once you learn some skills, you can manage and mitigate risk and leverage margins to increase your potential profits easily.
Learn the Functions of the Platform
It gives traders the opportunity to experience and understand the functions and features of the FX platform beforehand. It is a good way to evaluate the broker and see if the broker is worth opting for or not. Sometimes after reading reviews of a certain broker you might think that it is the best one but after engaging in trades on the platform you may realize it’s not as good as you expected it to be. To avoid such bad FX broker selection decisions its best to create practice accounts with different brokers to see the types of features offered before you commit with one.
Experience Real Forex World Volatility
If you are a first time trader, this can be an excellent way to get exposure and experience the real FX world volatility and see if they can master the art of making intelligent and accurate real time currency buying and selling decisions.
Helps Control Emotions
The key to FX trading success is patience and control over emotions like greed and fear. As you practice buying and selling of FX in the virtual environment, you’ll eventually learn how to make trading decisions with a cool head and keep your emotions at bay.
Overall, it gives you an opportunity to engage in risk free trades and sharpen your FX skills without even putting a single penny on the line.