Friday December 9, 2016 - 10:34:12 GMT
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5 Reasons To Use A Forex Demo Account Before Live Trading
The Forex and CFD market is hugely popular for full-time and part-time traders. It is accessible even to beginners, with nothing more than an internet connection and a bit of money necessary to start trading. But many beginners make the mistake of believing they are guaranteed to make money. This is partly the fault of certain Forex brokers who claim that the market is a get-rich-quick scheme. And so traders jump right in without doing their due diligence.
However, there are resources available to help beginners get started without risking everything. A Forex trading demo account is one of the surefire ways to get Forex and CFD experience without losing your money before you even get going.
These are 5 reasons you should use a Forex demo account before starting live trading of Forex and CFDs.
1. Learn the platform
One of the basic reasons to use a Forex demo account is to learn how to use the trading platform. Even though the best platforms are user friendly, they take a bit of getting used to, and you don’t want that learning curve to compromise your trades. Practicing with a demo account will, at the least, help you get used to the platform.
2. Practice makes perfect
There is a lot to be said for Forex educational material. You can find trading academies online, and you should definitely spend some time learning the ropes. But nothing beats practice. However, trading is a risky endeavour, and trial and error is just not an option when you're using real money. A practice account gives you the opportunity to follow that learning curve without losing your capital all too soon.
3. Learn about yourself
There’s a difference between theoretical trading and actually executing trades. All of us have, at some time or other, seen an opportunity to make money. But seeing the opportunity and following through are two different things. What you are sure will work in theory might actually fail in real life. Part of the reason is because we don’t act according to reason alone. Emotions play a big part. Trading psychology is an incredibly important factor in becoming an expert trader. A Forex demo account gives you the chance to learn how you react to certain situations, allowing you to become aware of the psychological factors that will be obstacles to your success.
4. Try out new strategies
Even experts can benefit from using Forex demo accounts. The simple reason is that over time you will come up with new strategies on how to take advantage of the market. It is risky, however, to throw money into the strategy without testing it first. A Forex demo account provides the perfect way to trial your new strategy.
5. It’s free
Finally, Forex demo accounts are available for free, and so you literally have nothing to lose. It’s responsible to try your hand at Forex on a virtual level before diving in and risking real money. A solid foundation will give you a much bigger chance of success when you start trading. Don’t get ahead of yourself, always acknowledge that you still have a lot to learn.
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