Forex Demo Trading
As a beginner forex trader your job is to progress from beginner level to intermediate level and then advanced. An advanced trader is profitable and can claim currency trading as a full time career or long term source of income. Demo trading is one of the steps in the process, follow the the steps outlined in this module and you will get there with very little risk.
Forex Demo Trading
New traders can practice trade their strategies without risking any money at all. You can set up a “demo account” or “practice account” or "paper trading" account. In these accounts you can make risk free trades with a simulated account that contains fake money or paper money. Demo trading is like a forex trading simulator.
You can accomplish quite a bit with a demo account, including learning how to place market orders, limit orders and stop orders, set price alarms, as well as monitoring your margin balances. Entering demo trades will become automatic after some practice, so get all of your mistakes out of the way in a demo account. Practicing the mechanics of entering trades is a great benefit in the process of going to real money trades
You can also use a demo account to see if the trade strategies or method/system you are using is working to make successful and profitable trades. If all of your practice account trades are all losers you need to look for another trading method and delay any real money trading. The strategies we use at Forexearlywarning work quite well but you must still practice trade to get used to the methodology and placing orders.
Micro Lot Trades
After you are successful at demo trading you can start to trade small amounts of real money in a micro lot account. One micro lot is 1/10th of a mini lot. We recommend starting with 2 micro lots then moving up from there to 4 micro lots, then 6 micro lots, etc. When you are trading micro lots look at your balance, margin, free margin and equity to get a feel for how these work in a leveraged account. Trading with micro lots will also help you to understand your emotions and how you feel in a live trade, including reactions to profits or stop outs. Watching your account balances and margin balances in a micro lot trading account will also help you to determine how you should fund your account and how many lots to trade as you progress to mini lots and full scale lots. You can also practice money management and scaling out lots in a micro lot account. Micro lot accounts and demo accounts are hugely beneficial to your progress to full scale trading.
Journaling Your Trades
Creating a journal of your trading history is easy. Your broker does most of the work for you. You should journal your demo trades and micro lot trades to monitor your progress. All you have to do is write down or take snapshots of the market condition when you enter a trade. For example you can write down the condition of the charts and The Forex Heatmap or take snapshots of the entry conditions, with any notes. Your fx broker will record the time of the trade, pair, and direction and it will appear in your account history and/or monthly statements, with the resulting profit or loss. Consistently profitable demo and micro lot trades will mean you are ready to increase the number of lots you trade as you progress to full scale lots.