If you have already started out trading with a broker, then you may already be aware that is possible to trade with Forex demo. However this fact is often overlooked by new traders. This tends to be due to their overriding desire to make money from the live markets.
However demo accounts are an important component of any trading strategy. It is important to understand the important role that they play in the process of currency trading.
The de-centralized market of Forex means that you will find a number of different brokers. These will tend to use a wide range of different price feeds and platforms for their dealing. Therefore you have to expect that there will, as a result, differences between the varying types of software used.
For this reason it is important to have an understanding of the trading platform offered by your Forex or Spread betting broker. Do this before you risk trading your real money through it. An ETX Capital demo account for example, will allow you to trade with the same conditions as a live account. This provides a safe environment to practice your skills.
There are two main types of trading platform that you will find available from brokers. These are the ‘web based’ platforms while the others are the ‘client side’ trading platforms. Here is a brief overview of how the two types of Forex trading platform work –
- Web Based – These are hosted by the broker and allow trading to take place from any Internet browser. They are accessed by logging into the platform via a unique account number and password.
- Client Terminal – With a client based terminal the trader will need to download software to the device on which they want to deal. A good example of this is the highly popular MetaTrader 4 Forex platform. This offers a Windows based terminal and additional applications for mobile devices.
The actual trading platform that you use will come down to your personal circumstances and ultimately your preference. However it is worth making use of a demo account in this instance to try out the operation of both types to find out what suits you best. All good brokers will offer you the chance to open a demo trading account. These are free and generally only require basic registration with the broker.
The role of demo accounts in Forex isn’t just limited to trying out the different account types. They can be used to successfully set up and test actual strategies that you intend to trade with.
Forex demo accounts let you test out various strategies and systems to see how they perform. Crucially they allow you to do this without putting your capital at risk. The full functionality that you gain on a live trading account will be at your fingertips. This means that you will be able to give your strategies a thorough workout in order to see how they perform. From this information you can then ‘tweak’ or adjust any settings in order to find out their effect on performance. Then, once you are happy with the results, you can switch to using the system on your live account.
You can readily open a Forex demo account from an online broker for free, following the completion of a simple online form on the company’s website. Opening these accounts tends to be instantaneous. This means you will gain instant access to the trading platform once the relevant details have been supplied. The only consideration you need to make is that many broker will impose a time restriction on these accounts. However if the account expires you can simply open a new one Port your settings and you can continue to test the strategy.