Why Are You Ignoring Currency Demo Trading?

And this is something I really do not understand about people who trade in the currency market. They seem to think they are wearing some sort of bullet proof vest, and can wade into the market like the Rock in Walking Tall. Well, there is no such thing. In fact, even I was like a limp wristed swimmer when I first decided to try out the currency market, and whatever experience I had as a speculator and investor went right out the window the minute i stepped into the currency market. Why? Simple fact 1. There is no such thing as similar markets.

Yes, they are interconnected to the point where one disturbance in a market will affect another to some degree, depending on the consumer chain, or B2B chain that the market has tied up to its mechanistic. But the thing is the futures market is different from stocks and bonds, which is different from the vanilla flavoured currency market, which is different from blue chips. Knowing how to trade stocks like a pro will only be able to get you repute when you get in, that repute is like a piano you are trying to win a shot put competition in. It will get you know where. You might get nods from traders who know about you, but the only thing that needs to earn that respect is the market.

Now given this scenario. Would you race in a 1, 000 horsepower sports car first, or run the virtual game to test out how it feels. Or even better. Would you fly a flight simulator first, or would you give yourself the controls to a jumbo jet and start flying actual passengers to locations around the world. Now, these passengers are your money, and they are valuable. In this flight, there is no insurance and the landing gears are technically your stop losses. But if you have never flown this place before, you are going to end up with the ducks or hanging of the edge of a cliff, taking down your money with you. Gravity here is your own impulsiveness and your arrogance to decide that you do not need a currency demo trading account.

Ok, I am also not taking the fact that you are a currency trading natural and you were born with the ability to spot movements in the Euro before any Cray super computer can. Brilliant. But this person would not be reading this article. He or she would be a chief advisor to a central bank, raking in billions of dollars on their say so. You are reading this article because you are interested in currency demo trading and that is a good thing. Be as interested as possible and the next step you should take is to actually sign up with one. Then you will be better prepared to take on the market like someone who knows their way around and not be eaten within a few moments

Currency Demo Trading - 2 Quick Tips

Currency trading, also known as Forex trading, is rapidly gaining popularity in the world of Finance. This high leverage and 24 hour market provides attractive incentives for many retail traders to consider Forex trading over any other form of financial trading. Indeed, one can easily start an account with merely $200, which is impossible in most other capital markets.

A beginner retail trader is always advised to first start out by paper trading. This is another term for demo trading, where you make buying and selling decisions as though you are trading for real, except that you are trading with 'fake' or virtual money instead. The aim of demo trading is to allow the trader to familiarize him or herself with the ups and downs of the daily market price action. Demo trading is a great way to get your feet wet!

In this article, I will discuss 2 tips that you should know of, if you are considering to demo trade, or if you are currently demo trading.

Tip #1 - Don't be afraid to try different platforms

There are a large variety of demo trading platforms for you to choose from. Don't be afraid to experiment with various different platforms to see which one you like the most. There is no single 'best' trading platform however, only one which caters to your needs. A platform that is suitable for one trader may be unsuitable for another.

Trading is a very personal activity, so you should always select a platform that you're comfortable with.

Tip #2 - Learn about the broker you're working with

The reason why you can easily set up a demo account is because the trading platform providers are hoping that you'll sign up an account with them when you decide to trade 'live'.

You have to remember that demo trading is only the first step in being able to trade profitably. Eventually, you'll want to move on to trading your own live account. That's why it's crucial that you first do some research about the broker that you're going to be demo trading with. Familiarize yourself with the terms and conditions, as well as any policies that may affect your trading.

You wouldn't want to be caught in a situation where you're used to their platform, but when you start a live trading account you encounter difficulties with their policies and thus have to spend time and money to switch brokers and platforms

Why You Rock in Forex Demo Trading But Suck in Live Trading

Many times new traders who have done well in a demo account open up a live account and things start to fall apart. Having real money on the line is very different emotionally than trading pretend money.

When losing in a live account, every pip can result is feelings of frustration or pure joy. These emotions can cause traders to make different trading decisions in that live account than were made when trading in the currency demo account. This usually leads to more losing trades. But trading live and making the same decisions when no money was at risk is key to your success as a trader.

No matter how hard you try, you cannot move up to the next level of trading until you learn how to risk real money. That what trading is all about. The key is to open that live account and to start out slowly.

In our Power Courses, where we teach people about trading, we recommend new traders start out trading only one mini lot at a time. Keep your risk small in the beginning until you feel good about the decisions you are making.

Trading in a demo will not help you practice this; you can only learn how to deal with this using real money. But that does not mean you have to take on a lot of risk to prove anything to anybody. You are just moving up to the next level of trading. Take your time, as the more practice you get trading live, the better chance you have at being a profitable trader.

What is slippage?

You bought the EUR/USD at 1.4000 and the market is now trading at 1.4025. Since there is an economic release due out in 15 minutes, you move your protective stop up to 1.4000 to protect your winning trade from turning into a losing trade. The number is released and the market trades down through your stop level to as low as 1.3975 in a matter of seconds. But instead of getting filled at your price of 1.4000, you are filled at 1.3990 and now have a losing trade on your hands. Why?

The answer is that there was nobody willing to take the other side of the trade at your price. A trade is when two people agree on price but disagree on value. One thinks the value is too high and the market should move down while the other thinks the value is too low and the market should move up. When a major economic number is released, the volume dries up as most big traders stand aside. They will not trade if they cannot identify their risk. So there is not as much volume as you would see in a normal market environment.

However, there are still plenty of traders trying to take advantage of the volatility. They will all want to trade in the direction the market should take based on the number released. So if everybody thinks that the market is going down, all these traders try to sell at the same time. The problem is that there are not many traders looking to buy if the market is falling quickly. So the market continues to fall until the buyers step in and start taking the other side of the trades. But they are buying at their price, not yours. In the example above, a sell stop order becomes a market order once the price designated is printed. So when the market traded down to your stop level of 1.4000, your order then became a market order. When you are selling at the market you are matched up with somebody who is buying. If they are only buying below your sell stop price, you will be filled at that level. This is called slippage and it is present in every market in the world. So if you are trading in a volatile market environment, you have to be prepared for slippage. It is the nature of the game.

Currency Demo Trading

Beginners need time to learn the details of trading. Currency demo trading in the Forex markets is an excellent method for these investment rookies.

Like training camps in the NFL where rookies learn not commit penalties or fumbles, currency demo trading is where investment rookies learn not to potentially fumble away their investments. Forex news is always full of stories where traders lose money. Currency demo trading is a means of reducing the number of these sad stories. This technique allows investors to practice without jeopardizing their investments. The Forex software is free and readily available to traders looking to go through their own version of training camp.

Learning To Succeed

Currency demo trading is about learning to succeed. It doesn’t take the place of fundamental and technical analysis, nor does it eliminate the need for a trading plan. What currency demo trading does is allow you two test your research and plan to confirm that you understand what it takes to invest in this complex market. Forex trading is a dynamic skill, forcing investors to master a higher level of expertise. Large sums of money can be made in Forex... or lost. This is one of the few forms of investing where you can actually lose a lot more money than you originally invested. Like the NFL, the stakes are high and so the training is vitally important.

Currency demo trading doesn’t replace the groundwork that you need to do to be a successful trader. Every good trader starts by developing a trading plan. This entails defining your goals, your investment philosophies, strategies for avoiding or minimizing losses and accepting profits. A well-defined trading plan will help an investor survive when emotions are driving other traders to make mistakes.

In addition to your trading plan, you will need to learn Forex trading. This means understanding the terms, the techniques and the research that make Forex trading so difficult. The truth of the matter is that learning a currency demo trading software is probably much easier than actually learning to trade Forex. Because of the ability to margin trade, an investor can control much more currency than his or her outlay would normally allow. Add the fact that Forex markets change rapidly and you have a recipe for disaster for the uninformed. Learning the basics of Forex trading and how to research investments is just as crucial for successful Forex traders learning a currency demo trading software.

Getting Started

This is another place where some study is needed. Choosing your currency demo trading account is essentially choosing your broker in the Forex market. Most times, if you become familiar with a currency demo trading account you will open your live account with the same company. This is another place where we can use an NFL analogy. This is kind of like a football player choosing his agent. Each one offers different commissions as well as different levels of support. A high-maintenance player might need an agent who offers the most services, but also charges the most. Another player might choose an agent who does nothing more than handle the money. The same is true in Forex trade where a levels of service and investment options can vary greatly.

Conclusion

Forex currency trading for beginners is like learning NFL. It can seem like a contact sport and you will take those hits in your wallet if you don’t learn how to play. A currency demo trading account can help you to learn the investment basics before you actually dive into the real game.