What’s the Point in a Forex Trading Practice Account

Forex is a way that you could make money quickly, but it is also a way that you can very quickly lose a lot of money. When you first learnt to drive you don’t clamber into a Ferrari and expect it not to be dented after the lesson, just as when you start in Forex, you can’t expect to immediately be making hundreds of pips daily and handing in your notice. This is the reason why it is always advisable to open a Forex trading practice account before you start risking your own hard earned money and taking the time to learn to trade without the risk.

All the Forex brokers that I have dealt with offer a free demo account that is quick and easy to set up, once you have installed their trading platform, which is usually Metatrader. You can then open the account with any amount and leverage you want, but I would recommend sticking to what you plan to trade with initially. Then you are all set to start trading in the Forex market and make mistakes without losing any real money.

In the beginning you will have to learn how to place trades, place forward trades, how to draw support and resistance lines and this is where the demo account really comes into its own. Before you even think about trading with real money, use the practice account for a minimum of 3 months and treat the Forex demo account as real money. I did this, planned every trade and kept to my money management rules, this showed me that you can lose money, but it also showed me that I can make money.

Once you actually want to start using you hard earned money and if your broker uses metatrader, you can then easily point Metatrader to a live system and start trading. You will naturally have to open and fund a live account with the broker, but this is usually a very simple process.

Another option rather than a demo account is to maybe look at Forex simulator software, this will allow you to practice your trading method, again and again at your speed. It will also allow you to practice your trading at the weekend when the markets are closed, which is a definite help if you are trying to squeeze in trying to learn Forex while holding down a full time job.

When you first start trading with real money I also wouldn’t recommend trading with the full amount of money you plan invest in Forex, you will be amazed how your attitude does change when trading with your money. In the beginning start off with a small percentage of your fund till you are happy trading with your own money.

Having to start with demo account and practising for months on end may seem to you like a waste of time, but the time and effort you put into your demo account really pays off in the end, and will make you a better Forex trader.

Gavin Dye is currently trying to make money trading in the Forex Markets, watch how he gets on a WatchmelearnForex.com and see if you can learn from his mistakes.

Author Profile: Gavin_Dye

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