Demo Accounts-One Of The Best Ways To Get Started In Forex

by : Teahupoo

One of the best ways to check out Forex trading and see if it is truly something that you like and feel that you can make money in is to open a Forex demo account. This strategy allows you to view the account online and see how the account would perform if it were a real account. It's kind of like how the military plays war games where they can test strategies without losing any soldiers. In the same way, you can use a demo account to make "pretend" purchases and sells just as if you were really doing them. Through the wonders of modern technology, the software used for these accounts brings realism to the account and shows whether you would have profited or lost at the end of your trading day.

Here's a closer look at how this method works. Let's say that you start with an imaginary amount of five thousand dollars in your demo margin account. After watching the news reports closely and studying the currency markets, you think the U.S. dollar will increase in value versus the Yen. Since your margin account allows you to buy at a ten to one margin you buy (theoretically) fifty thousand worth of USD and sell fifty thousand dollars worth of the Yen. The difference between the two called the spread is what gives you your profit.

So why would someone want to have a demo account instead of just jumping right in? It's quite simple really; it makes it easier and less stressful to learn the strategies and techniques without risking real money. It's like playing with Monopoly money! Why do you think pilots are trained in flight simulators instead of real airplanes before they are allowed to get at the controls of an actual aircraft? I can't think of anyone who would want to attempt to fly a plane without spending quite a bit of time in a flight simulator first, can you? Look at learning Forex trading the same way. You wouldn't want to risk your money on something that you know nothing about. So operating a demo account allows you to learn the business without losing money. Achieving success in the Forex trading market depends upon your own instincts and abilities. After trying a demo account, you may find that you don't have what it takes to be successful at this business. Or you may find you excel at it. It is far better to find out with a demo account how you would fare with real money.

The vast majority of reputable brokerage houses offering Forex Trading make these accounts available because they know that if you study and learn how to trade effectively you will be comfortable making larger trades, which in turn will make them more money. Some charge for the service and some offer them for free but even if you have to pay a small fee while you are learning it is a small price to pay if you are able to learn the skills to earn huge profits in the Forex market.