How to Effectively Use a Forex Demo Account
- 1 My Answer To The Question, Is Demo Trading Worth It?
- 2 Where to Get Quality Forex Trading Demo Accounts
- 3 Factors to Consider When Opening a Forex Demo Account
- 4 How to Effectively Use a Forex Demo Account
- 5 A Word of Caution- Trade as if it is Real
My Answer To The Question, Is Demo Trading Worth It?
I have to say that yes, demo trading is absolutely worth it. It is the best place to get real world trading experience, build your confidence, learn the mechanics of trading and a tool I still use today.
Yes, the giant of technical analysis and trading that you see before you today is indeed a demo trader. I do it for a number of reasons but top of the list has to be for safety.
Demo trading provides a level of safety for my real-money account that you just can’t get anywhere else. Why is this? It is because I know better than to experiment, test or make wild speculations with my real money; that’s what the demo account is for.
Having the demo account provides a place for me to make those trades that don’t fit my general strategy, or are part of my learning experience, thereby providing a layer of protection from the market and from myself. When I see a trade working then I can try the same thing with real money.
Practice Makes Perfect
There are a number of reasons why demo trading is important. For a newbie it is important because it is where you learn the mechanics of forex trading. Trading demo answers a lot of questions, questions like what happens when I enter an order, what does it look like when it’s open, what does it look like when it is closed, how does my money management work, how does my money management affect my trades and many many other questions a newbie or inexperienced trader may have.
Once the mechanics are learned, the demo account does not lose its importance. It also provides a training ground and launch pad for trading real money accounts. The advancing trader can use the demo account to practice trading strategies, money management, learn and study the market until they know it inside and out. A friend of mine, Okane, recently said something that I have found to be perfectly true. Trading the demo account, and studying the market, can help you develop a kind of sixth sense that will lead you to more profitable trading. Ultimately that is why I like it, it helps you get in tune with the market.
I can readily admit that I am not always in tune with the market. Sometimes I have winning streaks, sometimes I have losing streaks. The demo account helps because when I realize I am on a bad streak, or just out of tune with market direction or churning conditions and volatility, I can switch and start trading there for safety. Then, when I am back in tune I can move my trades back to the real money account. Believe it or not this is a really valuable tool but one that requires a certain amount of self control to use.
Yet another reason I like my demo account is for accountability. It’s very easy to look at a chart and say, “I think the market is going up” or “I think the market is going down”. It is something else entirely to to say that and then act on it. Even writing it down is better than nothing but with a demo account it’s more real, you have points to keep track of and everybody hates to lose their points. You see the trade in the account, you see if it wins or loses and you see if your balance draws down. It may be a fake balance but losing points is losing points, if you want to win as a trader then you have to be able to win with demo money as well as real money.
Where to Get Quality Forex Trading Demo Accounts
Do you know that forex trading is one of the most lucrative business ideas in Kenya right now, yet there is very little information available about forex trading for beginners in Kenya?
At Kenya Forex Firm, we put our money and time at risk to bring you the most comprehensive reports on the various ways you can make money online in Kenya. That has always been our objective and it will remain so for a long, long time to come.
Not so long ago, we got wind of a business idea that was promising massive returns, but at a very high risk factor. We decided to venture into online forex trading to clear the doubts and find out whether it is as promising as it is being claimed to be.
The first thing we realized once we started doing our research is that forex trading is a high-risk investment especially for beginners and you should never trade with money that you cannot afford to lose.
You should also consider finding a good tutorial or video course that will guide you through the various forex trading strategies and terminologies. Check out our forex learning page for ebooks and courses on forex trading in Kenya
Take time to learn all the forex trading tips before you risk your money, otherwise you could lose all your invested money.
Alternatively, I recommend that before you start trading with your hard-earned dollars, you first test your skills on a demo account. Almost every forex broker offers a demo account, and it shouldn’t be hard for you to find one that suits your trading preferences.
Factors to Consider When Opening a Forex Demo Account
The amount of forex brokers offering free forex demo accounts is simply mind-boggling. Here are a few factors you should consider before you open your demo account:
Size of the account
Consider opening a demo account with brokers who offer the largest demo trading account. The larger your demo account, the more opportunities you have for experimenting with different trading strategies and instruments.
Time Before the Account Expires
Most forex demo accounts expire after 30 days. However, it is advisable that you seek for a ‘no time limit’ forex demo account. It wil give you maximum exposure on your trades.
Functionality of the demo account
Some forex brokers offer demo accounts with limited functionality. For instance, some may not give you access to the company’s news feed. With this type of an account, you do not get anywhere close to simulating live account trading. Go for demo accounts that offer similar functionality as the live accounts.
How to Effectively Use a Forex Demo Account
Trading on a forex demo account is very dissimilar to trading on a live account. It is so easy to throw caution to the winds and just click sell and buy as you see fit.
Every reputable forex broker will offer users the opportunity to test drive a demo version of their online trading software. It is recommended that as a beginner forex trader, you place trades on at least 20 different forex demo accounts before you commit your money to any one broker.
The demo trading accounts are not for beginners only, however. Experienced forex traders also need the demo accounts to experiment and simulate new forex trading strategies before they place the trades on live accounts.
Windsor and EASY Forex offer demo-trading accounts, something that you should always look for when choosing a forex trade broker.
Windsor Brokers offers two types of demo forex accounts. One on the MT4 platform and the other one on a revolutionary platform they are calling Gwazy. I found Gwazy to be quite fun to trade on. Within five minutes of trading on the demo account, I had already earned $27.00!
Easy forex offers one type of forex demo account called The Easy Forex Simulator. The Easy Forex Simulator lets you practice how to trade forex for 120 minutes.
From my experience with the demo account, I would say that the Gwazy Account from Windsor Completely kills it. Go ahead and give it a try. It is worth it and it is full of fun.
The list of other reliable forex trading platforms with demo accounts include:
A Word of Caution- Trade as if it is Real
Trading forex in a demo account does not necessarily simulate how you would place trades in a live forex account. While you can be comfortable to lose $100 in a demo trading account using fake money, you may find that losing $10 in a live account very unbearable.
In order to gain massive productivity, knowledge and strategies of trading on a demo account, use it as if it was your money in that account. Do not risk more of the ‘fake money’ than you would be willing to risk in real life situations. Take trade volumes similar to the ones you would place in a live account.
Take Action today, open a demo account and see if you may fall in love with forex trading.