Think about airplane pilots, or astronauts: before flying for real they spend hundreds sometimes thousands of hours using simulators. Since currency trading is as dangerous financially as flying is physically, it makes sense that there would be a forex demo available, too.

A forex demo account is a smart way for a new investor to start. Reading books and taking online classes can teach you the basics, but the best way to learn anything is to get some hands-on experience. However, with forex trading, hands-on experience could mean ruining yourself financially. When you open a forex demo account, you can trade in a real world environment, without risking any real money.
Usually, the demonstration comes courtesy of a brokerage or other financial Web site that has an interest in currying your favor. The plan is that once you have tested your skills in the demo, you will get into the real thing and take advantage of the professional services the demo provider has to offer — forex signals, managed accounts, automated trading, etc. The demo is free, in the hopes that you will eventually register as a real money client

For that reason, you should be highly suspicious of any Web site that wants to charge for a demo. Considering there are literally scores of sites that offer free demonstrations, there is absolutely no reason that you should pay for it.

When you sign up for a forex demo account, you are given a username and password and shown how to use the demo system. Sometimes it involves downloading a piece of software unique to the company; other times it’s simply done over the Internet. (Some demos require Macromedia Flash, which most web browsers have installed, but which you will need the latest version of.) You set how much fictional money you want to start with, and off you go!

Once you are signed in to the trading platform, you do all the things you would do if it were a real market situation: reading the charts, following the trends, visiting online forums to get other traders opinions, and making trades. The trades are registered in the forex demo only and don’t go anywhere into the actual marketplace since theres no real cash involved. When the market changes, the program determines how much youd have gained or lost based on the decisions you made. You are able to say, Whew! Good thing this was only for practice! or Too bad this wasnt real! And once you have gained some expertise using the forex demo, you can move on to the real thing and begin making some money for real.

Filed under: Forex demo account

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