Many forex traders can open a demo account for free. This is extremely important, because it allows traders to utilize their strategies, and to adjust. Many first-time traders believe that their strategy is flawless, but after some time with a demo account, realize that the forex market is much tougher than they realized.
It should be noted that a demo account isn’t an account that is a “dummy” account, or an account that doesn’t have the same capabilities. The demo account has the same capabilities, which will allow you to develop your skillset.
Ultimately, the best way to become a great trader is to remove the risk from the equation. Of course, risk is important and will definitely come into play later – however, a demo account can allow you to truly work on your skills.
This also can help you determine whether the forex market is for you, witho zero risk. This can save you a whole lot of money. Rather than jumping into the market with thousands of dollars, you can simply trade without any kind of risk, and get an intuitive feel for the market, as well.
You really shouldn’t be opening a live trading account until you develop the right forex strategies in the demo account. This will help you practice patience for the right opportunity. If you think about it, it is a win/win situation. If you start making money in the demo account, this shows that your strategies are valid – and that when you do open a live trading account, you can use the same knowledge and techniques to profit. If you start losing money, you can then adjust your mentality and techniques to protect your capital in better ways so that when you do open a live trading account, you will be ready and understand the market more.
The truth is that you should develop your strategies in a demo account for MONTHS, before making the move to a live trading account. You can hold off and show patience in order to truly make a living – and if you can’t, maybe forex trading just simply isn’t for you.
It might help to focus on one currency pair. This is a great way to truly understand the movements of the market, and you can develop an idea of how people psychologically view the market, see how the sessions are in action, as opposed to simply guessing, and create the habits that you will need. This will also help you identify support and resistance levels. This time can prove invaluable.
Think of it like this – there is reason why artists, no matter whether it’s artist or music, REHEARSE their skills. They are able to stay in a studio and truly perfect their craft, and work through the mistakes that they might have. This way, when they are on stage, with people paying for their tickets, they can deliver the best performance possible. It is important to develop the skills privately before all eyes are on the artist. Similarly, demo trading can help you protect your capital, so that you are at your peak when you are finally trading with actual money of yours.
With the right mixture of dedication, luck, and judgment, you will find that the time you spent demo trading will prove invaluable, so that you can truly prosper when you do enter the market.