You'll need demo account to simulate how foreign exchange market works. Without it, you'll be like learning how to drive a car with eyes closed. Indeed, very, very dangerous.
Demo Account For Foreign Exchange Beginner: Simple How To's
Demo account helps beginners to try mock trading without the expense of real hard-earned money. Instead, you will spend virtual money there so you may stumble into foolish mistakes with much less headaches. Furthermore, you can experiment with many new Forex trading strategy or multiple indicators to generate trade signals. But that's not all, eventually you can also use it to test your Forex Robot
First, you'll need to install demo account into your personal device (PC, tablet or phone).
How To Install Demo Account For Forex Trading
Installing demo account is easy. That's because you can get it free from your Forex broker. First thing to do, look for "open demo account" button somewhere on your broker registration page. It may look like this:
From there, brokers may offer more than one type of demo account, like; MetaTrader4 or 5 (MT4 or MT5), cTrader, etc. If you're pretty clueless, just pick MetaTrader4 because it's one of most popular trading terminal.
Alternatively, you can download MT4 from MetaQuote website. Once you start pressing the download button, the client file should stay on your computer folder. Step two, locate that mt4setup.exe file on your download folder.
Step three, fill the checkbox to confirm your installation agreements. After then, click next. Additionally, you can change MT4 installation directory by clicking "Setting" button.
Step four, wait until the installer finished downloading all the required files. When it's done, click "Finish" button.
Voila, now you're done with basic installation!
How To Use Demo Account To Simulate Foreign Exchange Market
Simulation is they keyword, whatever you're going to do here can't reflect 100% actual live account trading condition. That's because there are some things that one can only experience in live trading sessions. Well, let's save it for later, let's just focus on what we should learn now.
Foreign exchange market basically works like other traditional market. Simply put, to make profit out of it, you have to offer something at higher price than it's original value. Well, that's easier said than done. To better illustrate it, we'll make a demonstration.
Take a look at the picture above. It's a chart depicting the Forex rate change in EUR/USD pair. As you can see, the Forex rate went down from end of September to November. During that time, you can make profit by pressing "sell" button to open a position. Let's say you open the position at 1.12500 by one full lot on 26th September. If you manage to hold your position from that day to 18th November 2016, you'll successfully close a deal that's worth about US $6,720!
But how on earth pressing a single "sell" button produce that much money?
Here's the explanation: The Forex rate change projects how much money you can accumulate over time. In our case, the EUR/USD value was updated from 1.12500 to 1.05855, so you had sold it at initial price level that was higher. See, in order to make profit you have to offer at higher price than its original price! buys cheap, sells high!
How Long Should You Stay On Demo Account Before Doing Actual Forex Trading?
Honestly, that's a hard subject to answer. Why? Because each individual trader is different to each other. Especially when it comes to educational background and personal motivation. For instance, a trader who got MA in business college will likely trade differently than another trader who doesn’t share similar educational background.
But, wait! We don't intend to discriminate people here! We just want to point out that currency trading, while easy to learn, is actually very hard to master.
Let's say by rare occasions, you had randomly opened a position, and somehow scored handsome profit. But in another, you had wished for the same thing, only to found that you have lost more. In that case, a better educated trader will learn and adapt faster to improve his trades.
Alternatively, a better motivated trader may persevere harder in face of many difficulties. So, which one are you? Are you that smart guy who learns fast? If that's so, it may only takes some weeks before you discover a consistent trading system that suits your strategy. Or, are you that motivated trader who persists against many bad trades? Well then, you may have to keep trading on demo account until you know what to do with trade signals.
Trade signals? Yes, trade signals can help trader to map out where current Forex rate will likely move, either upward or downward. To learn more on trade signals, click this picture below: