Before you trade on the live market you have to use a demo account. A demo account is a simulation of the market that you can get from any forex brokers. When you use these demo accounts you have to know how to use them correctly. There are certain points that you need to look at to ensure that you are correctly using the accounts.
How You Trade on the Forex Brokers Demo Account
The first step to using the demo account correctly is to trade on it properly. A mistake that a lot of traders make is that they assume that the risk free account allows them to freedom to trade in any way that they want. While this is true it is not actually how you should be using the trading account. When you trade on a demo account you need to do this in the same manner as you would on the live account.
This means that you have to have a trading strategy and stick to it. The demo account is not actually used to play on the market. It is used to hone your trading skills and to test your strategy and management plans. If you do not do this then you will lose money on the live account.
Trading on the demo account must be done according to your strategy. The analysis that you should be doing must be done and you have to use the stop loss orders as you would on a normal live account.
Use Less Capital
An issue that many people have with the demo account is the amount of capital that you are given. The amount of capital is more than any reasonable retail trader is going to have when they start on the forex market. This large amount of capital will distort the experience of the market as you will be able to trade with greater risks and use more money with each trade.
There are some forex brokers that will lower the amount of capital in the demo account for you. To do this you will have to contact the broker and ask for this. However, this is not something that all brokers will do so you have to be aware of this. If your broker will not lower the amount in your trading account then you will have to use only the amount you would have in the live account.
Pretend that the Money is Real
When you trade on a demo account you are given virtual capital. This means that you are going to be trading with money that you can lose without worry. This is a problem because you will not be prepared for the emotions that you face on the forex live account. It is important that you attempt to pretend that the money you are trading with is real.
If you are able to successfully complete this you will be able prepare yourself for the emotions of trading. Of course, this is something that a lot of people have a hard time with. If you are not successful then you will have to wait for the live trading account to control these emotions.