Demo Trading Helping In Attaining Familiarity With Forex !

Discussion in 'General Trading Discussion' started by TraderAnalyst, Jul 15, 2019.

  1. TraderAnalyst

    TraderAnalyst Active Member

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    With the help of demo trading account today’s forex traders can think of trading artificial money like any real money. And by this process a trader can get familiarity with the basics of trading.
     
  2. J_C_Anderson

    J_C_Anderson Senior Investor

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    Demo trading is a great tool to improve trading performance. Actually, it should be the first step for any trader. For sure, many traders want to use real account from the very beginning but such approach could lead to additional losses due to the lack of experience. To avoid such situations, it would be better to start with demo trading and use paper money till positive results would be consistent. Only when the trader has a statement confirming his trading results at least for a two weeks he can think about trading with real money.
    Simulated account is also great for working on necessary skills like placing orders or performing other operations with the platform. Active daytrader has only a few minutes to make trading decision, so he has no time to think about the way to conduct some of basic actions - they should be almost "automated".
    At the same time, many traders use demo account to test their new strategies. Such approach has both advantages and disadvantages. The main disadvantage is that you have to make dozens of trades to get the reliable results, while they might be a bit inaccurate due to the impact of trader`s psychology. To my mind, the best way to check the performance of the strategy is to backtest it using historical data. Nowadays there are special tools for backtesting, like Forex Tester - software that executes simulated trades in accordance with strategy rules using historical data provided by the broker. Using tools like this trader can easily test new ideas spending only a few minutes. Moreover, it is possible to perform several testing sessions using different combination of rules to find out what works best. For example, it is possible to figure out optimal stop width or other important criteria.
    Of course, demo testing of each new strategy is important too since it helps trader to understand whether it is comfortable for him to trade using this strategy or not.
     

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