With 5.3 trillion dollars traded every single day on the forex market, there should certainly be a slice of the pie available to anyone trying to get some.
However, the world of forex is daunting – especially for a beginner. Investing can be confusing at the best of times; throw in foreign assets and it doesn’t get any easier.
The programs people use to get an edge on trading are pretty complex in and of themselves! That’s why most have a demo option. With a forex practice account, you can try the software before you settle on one.
Here are some pros and cons to consider before using a forex practice account.
The first and most obvious advantage is that you get to familiarize yourself with an unfamiliar system.
Many of the trading programs are very utilitarian – lots of features and very powerful but leave much to be desired in the way of user interface.
Some people don’t mind the archaic aesthetic; others require simple and intuitive interfaces. This trial period is a good time to figure out which kind of person you are!
Secondly, a forex practice account will usually give you some fake money to invest while you’re learning the ropes.
This “monopoly money” is hugely important for anyone considering getting into forex. It allows you the opportunity to trade money with no risk while you get a handle on the intricacies of the market.
Of course, there’s no reward either.
Forex is a rapidly changing market, especially in today’s tumultuous political climate. Simply starting to trade forex on the wrong day could sink your investment before you even got the ball rolling.
If you’re using the fake money from a demo or practice account, you get to play in the real market and see where the trends are going. You’ll be able to invest real capital with confidence.
The downsides of a forex practice accounts are few, but tangible.
One of the most common gripes is by those people who “made it big” while trading their fake money. Unfortunately, there’s no reward for doing well with the money allotted to you by the demo.
Hopefully, you learned enough to repeat that success, though! If you’re unsure where to start, utilize some online courses to prepare yourself.
Another issue you might encounter is becoming desensitized to losses.
If you take the practice to heart and ingrain that there is no reward, you might find yourself also forgetting about the risk inherent in forex trading. This can become a problem if you transition to real trading and don’t invest prudently.
Your performance in the demo is not necessarily indicative of how you’ll do in the real world. Be sure to practice proper risk management!
A Forex Practice Account is a Useful Tool
If you’re serious about getting into forex, a practice account is worth a shot.
If nothing else, it’s an opportunity to get your feet wet and see if you have an aptitude for the market.
If you’re interested in trying some different trading software, here are some options to get you started.