With tough economic conditions, Forex is becoming increasingly popular as a way of trading because of its flexibility and ability to make the most of volatile conditions.
However, whilst the extreme volatility is what makes it so profitable, it can also bankrupt a trader if they are not careful. For this reason, it is essential to have researched your chosen currencies thoroughly as well as put in plenty of practice before going live on the market.
A good way to do this is by taking advantage of the simulation accounts offered by many brokers which allow you to experience trading in a live market environment without actually risking any cash.
If you are not experienced in trading, when faced with a rapidly moving market, it can feel overwhelming. And this can lead to mistakes which could be very costly. Simulation accounts allow you to get used to responding and reacting to the forex market, gradually building up experience to get ready for your debut in live conditions.
Simulation accounts generally offer you everything you would get from live trading, including up to the minute price updates. No matter how much research you think you have done, when faced with the reality of trading for the first time, it will feel daunting.
And psychology plays a huge part in the success and failure of trading. The most profitable traders are able to take failures in their stride, shrugging off bad days. However, it can be very easy to get sucked into making bad trades to try and compensate for a previous loss, or hang on to a losing position because it is difficult to admit your decision was wrong.
Every trader gets it wrong sometimes but the best understand this is an inevitable part of the market and make proactive decisions designed to minimize any losses. Trading on a simulation account can help to get you used to losing and help you assess how you reacted to it.
Oanda offer a great simulation account, suitable for both newbies and experienced traders wanting to try out new strategies. With more than 60 different currencies available to trade, the simulation platform offers the same features as the full interface, providing a thorough training experience. Unlike many other simulation accounts on offer, it never expires meaning you can practice for as long as you need. Some other type of simulation accounts automatically upgrade to a live version after a period, frequently around 30 days.
Oanda also offers the chance to dabble with different leverage levels to test what suits you the best, as well as allowing you to reset your account balance at any time.
Another platform worth considering is eToro. Offering a `Practice Account` potential traders can have a go on a replica of the live platform, available immediately upon signing up. eToro is renowned as being particularly good for novices with simpler graphics and being easy to navigate as well as offering a innovative system for less experienced traders to see what the professionals are doing.
For anyone seriously wanting to trade forex, a simulation account is an essential step that shouln’t be skipped before going live. By taking a bit of extra time to develop and become comfortable with your own trading strategy, your chances of earning a profit will be greatly enhanced.