Anyone willing to get into the forex market must first know the rule of the trade. It does not help to get into the market without any idea of what it is all about.

For this reason, having a demo trading account or a practice account in forex before fully indulging in it is more or less a requirement.

Trading using practice accounts or demo accounts is whereby a trader gives a shot at currency trading but on a trial basis.

This is always done by opening up a demo trading account and getting to try your hand at trading before fully indulging into the trade.

These demos help a potential trader learn the tips on how to make money in a volatile forex market.

Forex trade is actually a type of market where traders set their own price schedules depending on the platform they choose to use that is why it is often advisable to find a demo trader for each available platform before committing into the real trade.

Potential traders are allowed to download a demo trading for whatever platform they would wish to acquire and they use virtual dollars to try out on currency trading.

By using these demo accounts, a potential trader gets to familiarize himself with how to place orders, how to put stops, and how to set limits and stops at the time of entry.

Demo trading or practice trading has several advantages.

1. Forex Demo Trading is Free

Every trader is often advised not to venture into live forex trading without knowing what it is all about.

Once you have made up your mind to start trading in forex, find a broker, someone you will be trading through, who will help you get the demo trading facility. Here are some tips on how to find a good broker https://www.forextradingbig.com/how-to-choose-the-best-forex-broker/

It is actually free and helps you test the trading environment without actually using your resources.

By using the demo trader, you realize that with time you gain experience and skills of trading even before going into live trading.

Demo trading also speeds up learning of the forex market and tests the strategy of the potential trader to see if it can make it among competitors in the currency trading market.

2. Knowledge and skills

The good thing about venturing into the forex market is that it has demo traders. These demos help the potential trader to decide whether or not to venture into live currency trading.

The trader is given first hand information, knowledge and skills of what the currency trading online is all about. The trader learns about how to set strategies, how to place orders, how to put stops, and how to set limits.

The demo also helps the trader to get accustomed to the forex market as early as possible.

Opening a demo trading forex is recommended by experts because traders get to know how platforms work, the different kind of tools available in those platforms, where to get those tools, and how to use the tools in question.

Since forex trading is a volatile yet extremely exciting venture, a trader who uses the demo trading gets to have a firsthand feel of how it is to trade forex and learns how to use charts thereby increasing the chances of getting higher profits once the decision to get into live currency trading materializes.

3. Networking

Demo trading is an open platform whereby a trader can get to interact with as many brokers as possible. This is so because the trader is still trying to weigh options of whether to get into the currency trading or not and therefore liaising with as many brokers as one can get is quite vital in the final decision making.

You can also use different brokers for different activities, for instance, you can use one broker for charting on the platform while get the services of another different broker for live trading.

Since settling with one trading platform is not an easy task, the demo provides the trader with a foundation on which he can test all the available platforms then decide on one that fits his capital and strategies.

A demo trading account also gives a trader the liberty to try out different trading ideas and explore the strengths and weaknesses of the available trading platforms before finally settling on one or two according to his preferences.

4. Mental Preparation

Demo trading accounts is the best place for every trader to test his abilities of handling a loss. If a trader, while using the demo trading account, cannot yet learn that in trading sometimes you lose sometimes you win, then it is clearly not the right time to venture into live trading.

A trader must get proper psychological preparation to ensure that once he ventures into the live forex market, he can be able to handle any losses that come his way.

If a trader cannot handle losses in a demo trading account, then he still needs more time to learn the psychological aspect of trading whereby you are not allowed to bring your feelings into trade.

Every trader is advised to keep emotions away from the forex trading because it always comes in the way of success.

Many people who become so emotional after a loss tend to lose direction and fail to see a new opportunity to place an order or they fail to learn where they went wrong and then lose everything.

Once you learn that losing is part of the game and try handling the loss maturely, you will learn from the mistakes you made that resulted in the loss and be careful not to make the same mistakes in future. That is how winners get to where they are.

Summary

Forex demo accounts or practice accounts are free and offer the same services as a live trading account. It gives the trader ideas of what live forex trading is all about.

It allows the trader to make mistakes without incurring major loss, as this is the only way to learn the forex market.

Every trader who uses demo trading before going into live trading is known to make more profits than losses once they start live trading.

Check this article if you want to know when to shift from a demo account to a live account: From Demo Account to Real Account: When?