5 Ways to learn about the forex market from demo account effectively
Posted on 12th March 2017
In order to be a competent forex trader one must acquire the skills and knowledge to be able to execute trades successfully. A demo account is a great way to get started and try out new strategies or learn about market dynamics if your skills are more advanced. Brokerage houses offer practice accounts as a preview of their services so that investors eventually get inclined to open a live account with them. We pinpoint five ways to make demo trading more fruitful for learners:
- Trading platform is key:The interface for free practice accounts should not be different from the real trading platform you will be exposed to when you enter the actual market. Trading on the platform will help you to understand its process and functionalities better. Many traders prefer a customised trading platform whereas there are also a select few who like to trade on an interface offering single-click-execution facility.
- Focus on a major currency pair: When starting off with a demo trading account, track the movements of one major currency pair as they are the most liquid. Following more than one pair can be quite stressful for you as a beginner as the focus should be more on inculcating the right trading discipline and improving your trading strategies.
- Margin Trading: Several forex demo account providers offer investors the provision of trading on margin so that they can become well-acquainted with how it works before trading in a live environment. Remember that trading with leverage is a two-edged sword wherein your gains or losses can get magnified. With a trial account you will be able to learn the skills to manage your margin carefully while trading and avoid margin calls without risking a penny.
- Availability of News Feed:One can access news feeds on their platform while trading via a demo account. Such services from professional and reliable sources like Reuters, Bloomberg or Associated Press enable you to trade based on fundamental factors. You can also find out whether the kind of news the platform provides matches your requirements.
- Information Sources, Live prices:Once you start a forex demo account with any broker you can also avail their information sources which includes educational materials like e-books and forex tutorials, tools like economic calendars besides regular market commentary. Also, any good forex demo account software will display close to real-time exchange rates corresponding to actual market movements.
In a virtual trade setup you can make innumerable losses, even blow up your forex practice account in order to hone your approach and tactics. Your losses will be hypothetical, while the valuable lessons learnt are real and will stand you in good stead as a forex trader in the long run.
