According to many experts, the only way to improve your forex trading skills is to trade on a demo account first. The demo trading account is the ideal place to familiarize yourself with the trading tools provided and to acclimatize yourself to the world of forex trading without the risk of losing actual money.
But demo trading shouldn’t become a way of life. After a period of time you should prepare yourself for the live trading experience, to avoid becoming overly complacent on the demo account and to ensure that you have properly leveraged your account in a way that allows you to exceed in a live trading environment.
Listed below you will find some top tips on how to properly leverage a demo account and succeed in a live setting:
The biggest advantage of a demo trading account is that allows you to develop and practice your trading strategy with zero risks involved. The demo account will enable you to test out different ideas until you devise a strategy that you have utmost confidence in. This strategy, which should appropriately suit your trading style, should be tested repeatedly until you are fully at ease with it.
Learn the Ins & Outs of the Trading Platform
Demo forex trading also gives you the opportunity to learn the ins and outs of the trading platform and establish how well put together the platform is. In the midst of a live trade, the last thing you want is to be unable to locate an important button or feature, but after spending ample time on the demo account and familiarizing yourself with all the features, you will feel comfortable on a live platform and will be able to locate any necessary functions with ease.
Learn Proper Risk Management
The demo trading experience is also the ideal opportunity to learn all about proper risk management. As you execute trades you will learn how to properly place orders and how to set stop losses, which will protect your account from unnecessary losses. You will also be able to establish where your trading weaknesses lie, improve your trading strengths and gain a more in-depth understanding of your trading abilities in a risk-free setting.
It’s important to execute at least 20 demo trades before trading real money on a live trading account. This will give you plenty of time to test out an FX trading strategy in real time and to practice following a trading plan. It’s also ideal for educational purposes, giving brand new traders a risk-free insight into the forex market. Finally, it gives you the chance to watch the forex market very closely and get a feel for how the market functions without risking any real money – until you feel absolutely ready to do so.