Forex implies risks. Every brokerage states that on their website. At the same time, Forex also offers traders unique opportunities to earn fortunes. New traders look with envy at the professional traders that made fortunes from the comfort of their home. The question is; how do you become a successful trader when you have never traded before? The short answer to this question is:
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Learn as much as you can about trading from multiple sources
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Practice everything you learned on a Demo Account
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Move to a Live Account and work your way up gradually
Trading on a Demo Account
When you are learning about Forex trading, it is vital that you take a practical approach and apply all your newly acquired knowledge on a Demo Account. This is the quickest way to get acquainted to basic trading concepts. This will also allow you to get used to the trading platform interface, which means that in the future, you will be able to use it more efficiently.
There are several reasons why trading on a Forex demo is so important for your future development:
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A Demo Account implies no risks. All trading is done with virtual funds, so any mistakes you make at this stage will be virtual as well
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You can test your knowledge and practise different trading style to see which is more suitable for you
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The opportunity to see how the market works with actual live data and real time prices
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Familiarise yourself with the technical aspects of the trading platform
If you would like to test out the Forex market, you can open a 0 risk Forex Demo Account.
Differences Between Trading on Demo Account vs. Live Account
When you trade on a Demo, especially if you have done so for a longer period of time, it can have consequences on your future trading:
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Demo trading is risk-free, which means that you may forget at times that trading on a live account will trigger emotions. These emotions can lead you to make mistakes if you do not control them
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You may be tempted to overtrade and not evaluate risks correctly since you are only using virtual money to trade. When you switch to a Live Account, this may turn out to be an expensive lesson to learn
Trading on a Live Account
Once you are comfortable with trading on a Demo, you can move on to a Live Account and actually pursue market opportunities with real money. Forex4You has considered that new clients may need some time to gradually get into trading, which is why special account types were created:
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Cent Account: it allows new traders to test the market with very little minimum trade sizes. Essentially, you are trading in cents instead of dollars, which means that risks are reduced 100 times. On top of that, the spread is always fixed, which makes risk management simpler.
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Cent NDD Account: when you are ready to pursue bigger opportunities and you are used to managing risk for every trade, you can move on to the Cent NDD, where you get a faster execution for your trades, while still keeping trade volumes and risks low.
It is important to remember that these are entry-level account types and you can later move on to the accounts that offer you maximum opportunities, but where higher risks also exist:
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Classic: traders can benefit from quality execution, while maintaining the lowest costs possible with no commissions. This is an account for intermediate traders, where the spreads stay fixed even during news time.
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Pro STP: professional-level execution which also requires a commission to be paid per trade. It is best suited for those looking to achieve excellence in their trades.
To see the full list of features of each account type, you can see the Account Type Comparison and make a decision based on your level of experience and trading style.
