The first thing that a demo is supposed to do or is supposed to be used for is to study the ins and out of the Forex software that your broker uses, a good example is the MetaTrader 4. Beginners will not know the difference between a limit order and a stop order, beginners will also not know when to buy or sell or which currency to buy and which one to sell especially considering the fact that currencies are transacted in pairs and buying one currency is also the simultaneous selling of another, a concept that can confuse a beginner, therefore the need to start with a demo until the time a they get to know which currency to buy and which to sell and when to sell. A demo is a perfect ground for testing your fore system and strategies, As a beginner the first thing you need before you start is a system that is based on FX strategies. Until the time you start winning more on your practice trades only then you can then look to invest in your real account. Ask yourself why most demos are set at balances of $10,000, $50,000 or $100,000 because this is the amount of capital that will give the investor the best chance to succeed, because they will not be under capitalized.
This type of account offered by online brokers as a way to introduce beginners to their currency software and methods of execution. This is a great way to get started and learn the specifics of online trading with no risk of losing money and at the same time get to know the execution methods of orders and test various strategies for free. Using a practice account is the best way to gain knowledge and to help in the understanding of the actual trading process.
By using a demo, a beginner has the opportunity to learn executing transactions without risking their own money. Many traders find that by putting the knowledge in this site to work on a practice account, they get a clearer understanding of what to look for before, during and after each transaction. Even the experienced currency investors will also test the demos of other online brokers, especially if they want to change their broker.
The purpose for a demo is to familiarize the beginner with the various methods of analyzing price movements and order execution it provides beginners with examples of how the market works without the risk of losing cash. Because different types of platforms are provided to investors like the ones listed on this page; all brokers will have demonstration accounts with which one can use to learn the new software and about the various tools provided. Looking at the above example - one would require to familiarize themselves this new software afresh before starting to use this new platform - an investor would then open a demo and use it to learn the new software with it. To open a new demo account for practice trading, a trader can do this directly from the Forex trading platform.
Once you click this link you will be taken to your currency broker website where you can register for details of a practice account. Once you fill the form and complete this step, you will then receive confirmation details of your demo login and password details as shown below. The details of the free practice account you just registered for that are sent as an email will appear in your inbox as shown on the screenshot below.
Once you receive the login details, you can now then login into the MetaTrader 4 platform and start to access the financial exchange market and practice trading on this demo account. The lnk to also download the MetaTrader 4 platform is also provided along with the login and password details upon registration so that you can download the MT4 Software, if you haven't downloaded it. The procedure for installing the MetaTrader 4 platform, is covered in our previous lesson before this one; How to install MetaTrader 4 platform.
The practice demo only difference to the live account is the deposit, with a demo a trader cannot deposit or withdraw money but with the real account a trader can deposit and withdraw money and all the trades will be transacted using real money and profits can be withdrawn and losses will be deducted from the deposited amount. Traders should use this practice account to test out their strategy and practice curency trading until such a time that they can trade the currency market profitably. This will allow the beginners to practice with the MetaTrader 4 software until they become familiar with its operation.
The example shown above the virtual balance of $100, 000 as shown above on the MetaTrader 4 Transaction Window and a beginner can use this $100,000 dollars virtual balance. Once you register for a practice account with a broker and download their software, you will need to train on how to trade currencies using the platform you have just downloaded. After coming up with your system you will use this account to back test it or what was anciently known as paper trading, this is similar to the paper method only that it does not use pen and paper but the method of back testing is what is similar to that of paper method. Starting with $1,000 dollars or more is recommended, it is best to save your money up to at least $1,000 dollars that way you have a fair chance of succeeding as you will not make the number 1 mistake in Forex: under capitalization. In this video I will show you how to download and install MetaTrader 4 and open a FREE Forex demo account. Below using the MetaTrader 4 platform, on the top left corner; click File then click “Open an Account” button as shown below. Enter the details as shown below and save the information by checking the “save account information” button so that there is no need to retype the next time you want to login. Then when they learn how to make a profit on their demo then they can open a live account and start trading the real foreign exchange market.
These instruments are traded like this; when there is no enough liquidity or volatility in Forex then investors look for this liquidity and volatility in these alternate financial instruments.
Learning to operate this software is especially crucial for beginners with zero knowledge of the foreign exchange market.
Nowadays most people just learn one platform, the MT4, which is given by all brokers so when an investor moves from one broker to another they will still use the same software without the need of learning a new Forex software all over again. This is why all beginners start with a demo provided for by their broker for free so as to practice risk free before opening a live account.
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