What’s the next best thing to having a real dog? By having a stuffed-toy dog, or by having a figurine dog -- that would be the safest answers to give. Of course, owning a dog is not really an extremely serious undertaking, unless you have the mind of an animal-rights activist.
If you really know what it feels like to own a dog, why take an object that looks like a dog? Why not take a real, live dog that barks, wiggles its tail, and plays with you in your dull moments?
But here’s the thing about real dogs: they will bite you, especially in situations when you will be harsh to them, or if you don’t feed them enough. Now, what do dogs have in common with Forex trading? Well, nothing directly.
But if we’re going to look closely enough, we might get to see that if you don’t trade wisely enough, your Forex efforts will bite you, albeit painfully, because you will lose some precious earnings that should have been better investments somewhere else. That’s where Forex and dogs are a bit similar. – Lame analogy, but one that you have to contemplate on.
Mastering Your Own Demo Account
Now, let’s get a bit more topic-centered. How can you be truly well-versed in the very acts of trading? Should you invest real money in a real trading act right on? What if you’ll lose? What if you’d gain regret instead of more motivation to proceed with your endeavors as a successful Forex investor? Fret not and fear never, because most Forex brokers offer something that all trading newbies would be very pleased with: demo accounts.
With such an account, you will be granted access to an online portal in which you can conduct some trading practice using digital money that represents your first trading amounts.
All you need to key in are some numbers like your supposed dollar deposit, the currency pairing of your choice, your entry point, and your exit point. You will be then prompted to begin the trading simulation which actually looks and feels like it’s a real trading activity.
By doing it again, and again, you will surely begin to understand the ins and outs of a trader's life. Which will gradually transform your mode of thinking. Demo accounts are free and are easy to acquire. It just usually involves the following:
having an email account
having a computer or smartphone that you can regularly use
choosing the right broker
logging on to your chosen broker’s website and signing up
waiting for a confirmation email
downloading their trading interface and installing it to your phone or computer
configuring your trading settings and starting the actual trading
Performing all of these steps may vary a little depending on your chosen broker’s platform. But they basically work the same. There is no need to worry about not learning how to start, as their menus and guides are very comprehensive.
Choosing the best trading practice platforms is also very simple, here is a list of the best on the web so far: https://www.benzinga.com/money/best-forex-demo-accounts/ To make it even easier for you, you can just simply go to Forex.com where you will be guided easily to your first trading experiences. In case you want to have a feel of social trading, going to Etoro.com would also be a very wise choice.
What is the importance of practicing using a demo account?
Because jumping right into real trading using real money is often emotionally painstaking, using unreal money that simulates real trading scenarios would be very ideal for a Forex beginner.
You can begin trading right away, experience failure, and then restart the activity again and again. As you get into the habit, you will attain some considerable wisdom along the way and will be having lesser levels of fear whenever you decide to conduct real trading acts in the future.
But like an aspiring boxer fighting punching bags and sparring partners in the gym, using demo accounts has some disadvantages as well. Let’s talk about them so you’ll have better insights into the act.
Brokers may intentionally let you win more
Forex brokers are businessmen who want to attain more clients. And in order to do so, they will surely do their very best to make their platforms very attractive. Since that is the goal, they will most likely show that within their domain, you will surely win most of the time. Although expert traders will easily spot that, you as a novice will not see that through easily, as you are someone who really wants to get rich quick.
Although what happens in a real trading act is what’s depicted in a demo account simulation, it’s just exactly what it is: a simulation, unreal, fake, an imitation. The psychology behind the deed is there, but the actual learning gain is much lower.
You might get encouraged to overtrade
“Too much of a good thing is actually bad.” – This is a very famous adage. Even in Forex trading, the same principle applies. Ask any experienced trader, and he or she will most definitely tell you: “Don’t overtrade my friend, it does more harm than good.”
If doing the same thing again and again can make you better and wiser, wouldn’t overtrading make you a better trader? No. Becoming a good trader is built on trading at the right time with the right mindset. Much like the idea that “The best sex is not due to oversex.”
If you eat a top-class pizza delicacy, it will be very tasty during the first few slices. But eat an entire jumbo order by yourself, and you’ll be sick physically and mentally as well. If you’re forced to commit such an act, multiple times, the resulting outcome would be severe vomiting and withdrawals. You will then have it in your head to avoid eating pizza for the next years to come.
Of course, trading is different from eating. Experts have this to say: “Overtrading will make you see things in charts that aren’t really there, and will let you make foolish decisions.” Bear in mind that gamblers in casinos really can win, but most of them lose because they don’t know when to stop or when to take a rest.
To be truly efficient in Forex, never overtrade. And in spending too much time with demo accounts, you just might fall into that trap. Avoid it at all costs.
You might not get the proper psycho-emotional learning.
Forex trading is an emotional undertaking – that’s something that you should highly put in mind. Why many businessmen become so successful is they don’t only invest time and money in their endeavors, but emotions and mental efforts as well.
They formulate plans, review them methodically, and put those plans to work. How those plans get changed or executed differently will be based on what people feel or how they may react to the products they bring out into the world.
Because you’re not actually dealing with real money, you won’t be expecting real failure should anything go wrong. For that, you will be less scared, which makes you hop into false bravery, which will eventually push you into making wrong decisions.
But before you become too discouraged in signing up for a Forex demo account, you should take heed of this declaration: the advantages of demo accounts far outweigh the disadvantages. Here’s why.
They will teach you better than tutorials and articles can.
There are tons of videos and articles that serve as Forex trading guides all over the internet. Many of them are actually very helpful resources that can really make you an expert in the shortest time possible. But as what’s stated earlier, experience is still the best teacher.
Although watching those videos and reading those articles can surely help you get into the vibe, nothing feels better than being on an actual trading exercise. It is the only way of truly illustrating from a mental standpoint what the action is really all about.
They will show you the realities of the daily life of a trader, minus the financial expense.
Successful trading is a way of life, and you can’t be rich with it if you don’t make it your second nature, or at least within the list of your regular “to-do list.” But making trading as a way of life would be very expensive money-wise for a beginner like you. Demo-trading is the cheapest and most accessible way of replicating the daily dealings of an expert trader and for the time being, no better option is there yet.
Those are only 2 advantages, but their weight should be understandably heavier than the disadvantages. Start your own Forex demo account right now so that the expertise you’re hoping for will only be a few steps away from you.
Again, thank you very much for the recommendations. I don't expect to get rich from trading but I do hope to start to have a clearer understanding of how to manage it thanks to articles like this one. Thanks for thinking of the newbies and sharing this information.