Why use a Demo Forex Account?
What is a lot?
Why is reliable support important?
Why should Forex trading accounts be kept close to trading in live accounts?
In this chapter and the next, we will talk about the different platforms that brokerages offer and why it is important to take the time to choose the one that works best for you. And what better way to make that decision than to use a free Forex account for as long as you want.
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Why use a Forex Demo account?
Trade is not a child’s play. Although it provides unlimited opportunities for profitability, it also involves a lot of risk, and as brokers often warn about leverage products almost everywhere, the loss may be greater than the money you deposit. For this reason, traders who are new to the Forex market should take advantage of the benefits that brokers offer to test their operating systems and practice for free through trial accounts.
There are different brokers, and as we said earlier in Article 8, “Forex Brokers and Where to Market”, they are the interface between Forex market users and liquidity providers and facilitate trading through their trading platforms.
The trading platform is what the user sees and experiences in their daily trading sessions. Some brokerages have the capital to build their own trading platforms. While some of them use white-label products that they customize, while others just buy a license to use one platform, to use it as it is. Like metatrader by metaquotes software.
Due to the wide variety of brokerages and even more platforms, it is recommended that you learn the features and quality of each platform by trading with gambling money before committing to real capital.
First and foremost, every trader should familiarize themselves with how to place an order on the new platform. In most cases, users enter a long position on the currency by clicking the “Ask” price, or the buy button, in a pop-up window, while short-order registration is done by clicking “Price” or “Sell”. This method is shown in the image below from the fxcms web trading station.
Some platforms allow you to order directly by clicking on the chart. On the fxcms-based web platform, this is done by clicking the right mouse button and selecting the type of custom you want to do.
At the same time, some allow you to select and apply a market restriction or order after the price tag is specified, while others require you to do so.
Other key points to consider are spreads, the size of the lot you can trade, and how to set up a stop. Spreads can be fixed or variable. In Article 8, “Forex Brokers and Where They Are in the Market,” we describe the types of brokers and how they define spread or volatility.
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Lot size
Determining the size of the lot you can trade is also very important, especially for novice traders. The lot value represents the minimum amount of assets that may be traded in an order, which means that the larger the lot size, the greater the risk.
Lot system is used to standardize prices. This standardization allows each investor to easily determine how many units to buy with each contract and evaluate the price of each unit.
For example, in stock trading, each contract or lot contains 100 shares, also known as “round lots”. Any number of shares less than 100 or 1-199 is called “odd lot” and is not sent in the bid / request data in the exchanges.
Any number of shares greater than 100, which is not a multiple of 100, such as 334, 876, 475, is called a “mix lot”. Mix lots are usually traded by round lots, and the remainder, which includes odd lots, is canceled.
In Forex, currency pairs are usually traded in standard lots, mini lots and micro lots. Standard lots are made up of 100,000 currency units, while mini-lots are made up of 10,000 and micro-lots are made up of 1,000 units. This means that if you go with 1 lot (standard) in EUR / USD at the asking price of $ 1,3000, you will buy 100,000 Euros, while you pay $ 130,000 for it.
In each pair where the US dollar is a single currency, a pip of price movement equals $ 10 from a standard lot, $ 1 from a mini lot, and $ 0.10 from a micro lot. This is why novice traders are usually advised to trade using mini or micro lots. Because the situation creates less loss and damage. This of course means that operating systems that allow traders to move and mix lots have a competitive advantage because they are more flexible and generally more suitable for beginners.
Reliable support in Forex Trial Account
Another important feature that a newcomer should test is how responsive and useful the support is. Like any other business, the support office is one of the most important parts and helps you in problems such as lost passwords, technical problems, problems in depositing or withdrawing money. And because the Forex market is decentralized and operates around the clock except on weekends, it is essential that your broker support it accordingly.
Apart from the fact that some brokerages allow you to chat and ask questions on this platform, most reputable Forex traders also provide you with call centers, and if, for example, the Internet connection is lost in a trading session. Operators can help you.
Keep it close to reality
And last but not least, when trading with a forex trading account or demo, a novice trader should always try to act like a real account to make it easier to transfer to real money later. You should always keep the risk at levels that you think you can manage, such as if you had a hard time getting it to be at risk.
You should also set up a demo account, with about the same amount of budget you deposit into a real account. Some operating systems allow you to earn up to $ 100,000 trial for us, which can lead to orders for millions of currency units when you add power. If a novice trader gets used to such a large number in a trial account, it can lead to excessive risk in a live account of $ 5,000 or $ 10,000. Because he loses his discernment.
You also have to keep in mind that although people are different in their willingness to take risks and everyone accepts the loss in their own way, everyone hates losing money. This means that someone may be relatively good at losing $ 100,000 on a trial account, but they may be very excited when they lose $ 50 in real money.
After making the first 30-40 trades in order to get used to the user interface, a trader should focus on finding the right strategy for himself. By practicing with game money, you can decide whether you are an aggressive short-term trader who uses high leverage and enters into many daily situations, or whether you prefer to use smaller lots and take long-term positions with Have the goal of big price changes in the coming months.
However, no matter how good your strategy is, you should always keep in mind that trading with a trial account is very different from real money trading. This means that even if you succeed while practicing, it does not guarantee that you will make a profit after switching to a live account. However, professional traders agree that if you can not succeed with show money, you certainly will not succeed in the real world.
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