Forex Trading Basics- Setting up a Demo Account - Novinite.com

Posted: 25 Feb 2020 01:24 AM PST

It's no secret that if you want to become an expert in something, you must practice. There is no short cut to success. Have you ever come across the 10,000 hours rule? According to this rule, if you want to be an expert at anything, you must be ready to practice for at least 10,000 hours. It applies in every aspect of life, and Forex trading is no exception.

Forex trading is easy, especially for professional traders. In the eyes of an expert trader, it looks quite simple and understandable. But in the eyes of a newbie, Forex trading may seem complicated and risky. So, how do you learn to trade Forex without having to risk your hard-earned money? The secret lies in the forex trading demo account. In this article, you will learn everything about the demo account, from how to create them, their advantages and disadvantages, and where you can create one.

What's a Forex Demo Trading Account?

A Forex demo trading account is a virtual account that allows you to trade with virtual money. A demo account simulates a live account. The only difference is that you are trading with virtual money. Demo trading accounts are risk-free, and you stand to lose nothing. Both novice and professional traders can use demo trading accounts. For instance, if a professional trader wants to test a particular strategy, they will use a demo trading account to do so. Since there is no risk of losing capital, traders can learn and gain experience while using demo accounts.

What are the Features of a Demo Account?

As highlighted earlier, demo accounts provide a safe platform for traders to learn and earn experience in trading the stock market. Demo trading accounts have different features depending on the provider of the platform. Some of the standard features of demo accounts include:

1. Charts

Many demo trading accounts have critical charts, especially when trading currency pairs. Without these charts, it would be almost impossible to know the most profitable trends in the market. A demo trading account will help you explore and interpret charts and also implement a variety of charting tools.

2. Analysis of Trading Tools

Every Forex trader will need indicators for technical analysis and other critical tools to trade Forex. These tools help you to pinpoint the best place to enter and exit a trade. With a demo trading account, you can try as many times as possible until you find the best point to enter the trade.

3. Market Research

Market indicators are only useful when you can read the market trends. For instance, you need to know the basics of candlestick analysis to trade effectively. A demo trading account is an excellent platform to master these nuances.

4. Testing Market Trends

Many demo trading accounts provide tools to test market trends. The Forex market is always shifting. For instance, you can have particular currency pairs showing good profits in Asia while others are performing better in the London trading session. Trading with a demo account will enable you to observe these trends and determine the best time to trade in a particular Forex market.

What are the Advantages of a Demo Trading Account?

When many people start trading Forex, they know little or nothing about Forex. If you decide to learn by trading with a live account, it may cost you a deposit. So, the best thing is to register for a risk-free demo account. With a demo account, you will make mistakes, but you will learn from them without having to lose your money.

Another advantage of using a demo trading account is that you get a chance to test the quality of services offered by your broker. With a demo account, you can check the effectiveness of their platform and the tools that they provide.

Lastly, a demo trading account gives you first-hand experience. You can learn a lot about Forex by reading books, attending seminars, and watching videos, but nothing can beat the experience of learning on a demo platform.

How Long Should You Trade Demo Before Going Live? - STL.News

Posted: 28 Feb 2020 11:27 AM PST

(STL.News) Studies have shown that around 70 percent of traders have live accounts, but 63 percent of those are losing money on a regular basis. Surely, though, the whole point of trading is to make money? To make a profit? Why then are more than half of traders losing so much? The answer is that it all comes down to practice. The more trial and error you allow for at the start, the less error you'll need to contend with at the end, when you really should be making more money than losing it. Yet it can be difficult; all this trialing and practicing can be expensive. Unless, of course, you use a demo account to practice on. This can be the ideal way to make sure you're entirely ready to go for it and use real money to trade with. The question is, of course, when do you know you're ready to make the switch? How long should you trade demo before going live? The following applies to trading stocks and forex exchange.

The Learning Experience

It's a difficult question to answer in some ways – there are so many variables that come into play. One thing that you must be sure of before you come away from demo trading and start trading for real is that you know the basics of marketing. This means you have a strategy at hand that you are confident in; it needs to have an entry point, an exit point, and you need to know how to leave the trade if you need to should something go wrong.

Having this information in your arsenal is going to benefit you greatly when you change from demo trading to live trading. Without it, and without having a trading chart that you can rely on to give you profitable trades the majority of the time (remember, there is no way to win one hundred percent of the time, so be sure that you can afford to lose whatever you are treading with), you just won't be ready to trade live profitably.

The great thing about demo trading is that you can spend time but not money in getting your strategy and your trading charts exactly how you want them. Since everyone wants something different out of trading and everyone works in a different way, creating your own charts and ways of working is essential; copying someone else's just won't work for you, and it will be harder to understand.

Are You Trading or Gambling?

Knowing the difference between trading and gambling is crucial. If you're doing the former, you may well be ready to trade live. If it's the latter, you're definitely not. How can you tell the difference? It's easy. When you are a trader you understand how to make a profit; you're not guessing or hoping for the best. You have a strategy at hand. When you're gambling, it's likely you'll be playing on a hunch, or even picking trades at random. This is no way to be profitable, and the likelihood is that you will lose much more than you ever win. Although you will still lose when trading – because everyone does – you won't lose as much, and you will certainly be more successful than if you are gambling.

You Need To Earn It

Some people say that demo accounts aren't any good because you don't experience the same emotions are you would with a live account. You're not using real money, you're not actually winning or losing, so it won't give you the same feeling. Or they might say that because they only trade with small amounts, if they lose while they're learning they won't really be affected.

The truth is, emotions are useful when it comes to trading. It's far better to think in technical, analytical terms than it is to be emotional about it. In fact, being emotional is a good way to lose more – you will try to claw back your losses or you'll think you're on a 'winning streak' (which doesn't exist) and keep going even if the charts say not to. So it's far better to stick to the methods you know work because you have practiced them time and again on your demo account and not be swayed or tempted to stray from that path. Emotions are a profit killer. Once you have done all the groundwork you will have earned the ability to trade live, and you'll know that your strategy is a good one.

Are You Logical and Methodical?

Perhaps when you first started you tried any and all trades on your demo account to see what worked for you. As time went on, though, did you stop that process and whittle the trades down to the ones you knew your strategy entailed? Did you stop trading when there was nothing suitable to trade? Did you start to put a plan in place? If so, that's a great way to work – being logical and methodical in trading is a way to make more profits than losses.

It will take time to sift through all the information and advice that you'll be surrounded by. Some of it will be good, but some needs to be ignored. While you're working out which is which and you're trying many different methods and ideas, a demo account is going to be the best course of action. Think of how many trades you can try out without fear of losing money; you'll get to your goal more quickly and it won't cost you a thing.

Conclusion

How long should you demo trade before going live? The answer is, it depends. It depends on how much work you put into creating your own trading strategy. It depends how much research you are willing to do. It depends how confident you are in the work you've done. So really it depends on you. Once you are confident and you know you can make a profit, then it's time to make the switch.

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