Forex demo accounts: why you need to learn to walk before you can run.
Forex trading is a pretty simple concept; you pick a currency, decide whether you think it will appreciate or depreciate against another currency, and hopefully make a profit off the trade. Even actioning the trade itself is simple – with leading software all it takes is the click of a button. But behind the act of the trade sits an almost infinite number of factors that can affect your decision of whether to buy or sell, and on what currency pair. Things like politics, economic trends, individual business decisions and even natural disasters can all have an impact on Forex trading. To be a successful trader you therefore need to be aware of how all these sorts of things work together to affect currency prices. And the best way to do that? Practice. That’s where a Forex demo account comes in.
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Many leading Forex brokers offer users access to the very same software and systems that global traders use. The difference with the Forex demo account is that you don’t have to put any of your own money down in order to use the system. Leading brokers like Vantage FX will offer a Forex demo account with up to $20,000 of virtual funds to use, making it a risk-free way to learn to trade Forex.
Once you’re signed up to a Forex demo account, you’re free to do with it as you please. You can just sit back and observe how the market works, go all-in and place everything on one trade or anything in between – the choice is yours and you won’t be putting any real money at risk. The key, though, is to treat any Forex demo account as if you were dealing with your own money. If you’re reckless in your trades in a demo account, you’re setting yourself up to be susceptible to real risk if you decide to start trading with your own money. Instead, you should apply the same strategies and attitude to risk that you would if your own money was on the line. Taking this attitude will be far more beneficial for you in the long run.
To help you along in your journey towards becoming a trader, brokers offering Forex demo accounts usually also offer customer support. For beginners, having expert traders available on the other end of the line or just an email away should be something to be taken advantage of. (Of course, the broker won’t be able tell you which specific trades to go for, but they’re there to help with other information about how the system and software works). Good brokers should also have Forex education resources available through their websites. Things like forums, animated video production tutorials, webinars and infographics are all very useful free tools for traders looking to understand how Forex trading works.
When you combine these types of resources with a free Forex demo account, you’ll find that there’s plenty of information to get you started. Pretty quickly you’ll find that strange trading terms like Pips, Leverage, Spreads and ‘Going Long’ will become very familiar. And, as with most things, the more you practice, the better results you’ll get.