A free forex demo account is an account given out by all forex brokers in the market to anyone who signs up for their services. This account is absolutely free to sign up for and allows you to access the forex market in real time but not with real money. The forex broker will give you some “play money” or virtual currency along with the account for you to trade with. This account is absolutely free and no one should charge you to get one. So how do you get one and how does it work? To get a free forex demo account all you have to do is select your preferred broker and sign up for a one.
Signing up is free and will only require your email address and a name. Once you are signed up you will most likely be required to download the trading platform that will allow you to place trades and monitor them as you please. The broker will also give you virtual currency to enable you to trade without risking you money. Once you are set up, you are free to start trading and testing the market. The main reason you should always get a forex demo account first is that it will enable you to understand a number of things about the forex market. You will get to know:-
The times you should trade and the times you should avoid going into the market, How the different currencies fluctuate in the market, their demands and supplies, how they correlate to each other and they generally behave. The currency pairs you prefer to trade and why. You will also get to determine the amount of time you have to trade and be able to plan accordingly. You will be able to test different trading strategies and techniques and come up with a trading plan that suits you in terms of personality and time availability. You will also get to determine if forex trading is right for you. You get to do all these without risking any of your money and can proceed to trade live (with real money) with confidence.
However for you to achieve all this, you will be well advised to practice using a demo forex account for at least 6 months, but preferably for a one year, before you start trading live. You will also have to discipline yourself to treat the money in your account as if it was real money in order for you to truly learn. If you treat the virtual cash as just that, virtual cash, then you will be sloppy in your trades and will never really know if the strategies you are developing will truly be profitable. This can cause you to lose your money when you start trading live.
By: Nina Ndubi