How to Go About Your Forex Demo Account

Forex demo accounts are almost everywhere and are rather easy to sign up for. The best part is they are free. All it takes is to register your name, email address, and your phone number and you’re good to go with your practice account.

However helpful a demo account may seem in fast tracking one’s forex learning curve, it may actually lead you to develop risky trading habits such as trading excessively and taking in more positions than you can possibly sustain with your capital once you switch to live trading.

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Most practice accounts start with $25,000 to $50,000 in virtual money.  However, majority of retail traders are comfortable trading only mini and micro accounts with committed capital of only $2k to $10K. Practice accounts with virtual money which is far more than the capital you intend to start with once you start trading live, exposes you to the risk of trading excessively and far more than what your intended live trading capital can tolerate. To really hone your skills and prepare yourself for live trading, ask the broker to limit the virtual money for your forex demo account to the amount of capital you intend to start with if and when you do actual live trading.

Start with Mini or Micro accounts

It is always better to start trading with micro or mini accounts. This will expose you to the lowest risk possible while you are in the initial stages of your forex learning curve and while you are still in the “getting to know you” stage with the forex market. A practice account will help you be familiar with the peculiarities and characteristics of the highly volatile foreign currency market. Filled with the same amount of virtual money that you are prepared to commit in live trading, the practice account will be a perfect training ground to develop skills and trading systems that suit best your risk appetite.

Keep a Record of all your trades

Keep a record of all your trades noting down the reasons behind each trade as well as the existing fundamentals and/or technical analysis leading to each trade. This will help you identify where trading mistakes were made as well as serve as your basis to weed out faulty trading habits in the future when you finally go live.

Learn How to allocate your Time

Forex trading is a 24 hour market and most upstart traders tend to be glued to their monitors watching the market non-stop. This will easily burn you out and force you to commit avoidable trading mistakes. Be familiar with forex trading zones and the most active trading hours and schedule your trading times during the busiest trading hours which are usually during the times when the European market and North American market are both open.

Forex demo accounts are of great importance for both the experienced and the upstart traders. The experienced traders can use them to fine tune their trading strategies while the upstarts can use them to fast track their forex education. They are practice accounts and are invaluable tools of the trade and remember always that practice makes perfect.

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