Forex trading can be very lucrative if you know what you are doing. However that doesn?t mean that newbies doesn?t stand a chance when it comes to earning a profit by trading currencies. It?s just that the more experience you have in the Forex market, the more you are able to understand what?s going on to help you make the right decisions. So for a lot of newbies, getting familiar by educating themselves about the Forex market is highly recommended.
Another strategy that comes highly recommended is to make use of a Forex demo trading account first before diving into the real thing. There are a lot of Forex brokers online that has a free demo account which newbie traders can take advantage of. These demo accounts are meant to represent the actual Forex market conditions ? thus newbies can quickly learn how to make virtual trades with no risk on their end.
In a demo account, you will be trading with play money just so you can get comfortable with the trading platform and in the end test out a strategy to make it work. Here are some advantages of opening a demo account:
1. Free ? most demo accounts are free so if you come across a broker that would ask you to pay for their demo Forex platform, we suggest that you move on to the next broker on the list. Although it?s free, most brokers will try to get your information before you can open a demo account. This is so they can contact you and try to talk you over to open a live Forex trading account with real money involved.
2. Improves Learning Curve ? learning how to trade currency is all about strategies. When you have a demo account, there is a platform that you can test on if the trading plan that you are thinking will work since it simulates the real market. You can test multiple strategies and come up with your own trading habit and system until you are comfortable enough to trade in the real Forex market.
3. Effectively teaches you to use the trading platform efficiently ? most newbies have a difficult time grasping the whole idea of trading platforms. Some are actual learners but are afraid to risk real money while learning. When you have a demo account, you will be able to explore the different facets and tools of the trading platform ? before you start committing real money in Forex trading.
On the other hand, one drawback of using a demo account is that it does not really sit well when it comes to your so-called "trading psychology". Since you don?t have risks involved in a demo account, you would not really experience the real thrill of Forex trading. It wouldn?t also teach you on how to deal with your emotions if you find yourself in the losing end when it comes to the real Forex trading.
Marissa is writer for 2ndSkiesForex. Visit http://2ndskiesforex.com for more information on Forex trading.
Source: http://www.ericfinance.com/forex-demo-trading/
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