One of the biggest hurdles you would have to face when getting started with Forex trading is the fact that this business, or rather “the markets” would require something from you that you simply do not have, and that is’ experience.
Experience comes in handy in a lot of different areas of life, maybe in all, I am not sure, but I can promise you that experience in Forex raiding is make-or-break and remember, the Forex markets are brutal so you can lose a lot of money very fast if you are not careful.
But how do you get experience? How can you make money with Forex if you simply have not yet tried it and are just a beginner starting out?
Does this mean you have to Lose money before you make money?
No, because luckily, you can practice forex trading with a free account and if you have not yet touched forex so far, I suggest you do at least 6 to 12 months practicing on a free (demo) account before you ever put a cent into the market.
What Is A Forex Demo Account?
A demo account, in Forex terms, means that you can use the market to its full capabilities, but its fake “digital money”.
How To Get Started With A Free Demo Account
Free demo accounts are everywhere, and you can get them from any (legitimate broker) online but, you do not have to join a broker just yet.
Side note #1:
A broker is a service that will host your real money and facilitate trades backed by them. While this is a must to trade with a live account, you do not need a broker to get an account.
If you want a quick demo account, simply download MetaTrader 4 or 5 (I prefer 4), and you can create a demo account directly in the app and start playing.
Side note. #2:
While it’s true that yes, you can trade on a mobile phone, it’s highly recommend able to do your analysis on a mobile phone.
To be able to really work the markets, you are going to need a bigger desktop screen (or maybe an iPad) so head on over to MetaTrader and download the desktop version. (You may also be interested in eToro for this).
Now that you know how to get started with a free demo forex account let me give you some advice that I had to learn the hard way.
Please do not skip this as it is crucial to your success as a practicing forex trader.
Things To Remember When Using A Free Account.
Don’t Start Big
When you try to practice forex trading with a free account, you have the option to start with as much money as you want, the maximum being $100,000 digital money.
Now I do not know how your bank account looks, but chances are that you are not going to be depositing $100K when you do go with a real account so my suggestion to you here is to start a demo account with (or close to) the amount you intend to start trading with.
Say something between $2,000 to $5,000 will do.
Why do I say this? Keep reading.
Note The Income Is Not “Real”
When you trade with a big account say $50,000, your profits (or losses) appear to be huge. Now, with a large account, it’s not hard to have a trade go about by a few points and appears that you have made $500 in a single minute.
While yes that can happen with a real account too, as I said you are probably not going to start with a six-figure account thus you should be careful not to let the “big numbered” wins get to you.
Place a trade and instant making $500 may seem enough in your head, but it isn’t when you consider the amount of “fake risk:” you are putting in.
What I am trying to say is that it can get very addictive to see how easily money can be made with a free account, just remember that it is not real money and it is not what you would be making if you decided to go “live” with a real account with less money.
Do Not Over Risk
Again, I have to remind you to treat your demo account as if it were real money, hence why I urge you to make sure you do not over rush.
Even though it’s not real money, you need to make sure you do not get in the habit of over-trading, especially if you want to make money with Forex when you go with a live account.
It’s also very hard to over risk without you knowing it.
Also, and I am guilty of this many times even when I was practicing forex trading, you tend to risk more to make up for lost trades.
This is a big no-no and a sure-fire way to blow your account and quit forex forever. Never try to make up for a lost trade by risking more on a new trade.
You might be thinking: yes sure, I won’t do that, ” but it’s very hard to fight the feeling to risk more to win more when you have real money.
A real live account with real money changes you, and it’s a completely different physiological warfare when you have your real money in the markets.
Make sure you do over risk, over trade or try to make up for lost bets or go for quick riches.
Experiment & Remember
The main point of practicing forex with a free account is that you get a clear understanding of how the market works.
The market is not predictable, you will lose trades, and you will also be wondering “wtf did just happen” 8 out of 10 days you trade Forex.
But, luckily as I have already mentioned, you can learn these “hard earned lessons” without losing a dime or a cent.
Yes, you will still lose trades with a love Forex account, but you will have a much probably of making with Forex if you take as many punches as you can with a free demo account.
Whatever you do with a free account doesn’t affect your bank account, but if you make it a point to experiment with it and remember the lessons you will learn along the way, then a free forex account can have a significant effect on your bank account when and if you decide to go live.
Learn, experiment and fail; that is the whole idea why you should practice forex trading with a free account.
How To Know When To Go With A “Real Account”?
Another questions I would like to address before I end this blog post is a question that there is no right or real answer to it and that is: when should you go live.
If you have been practicing with a demo account, have not made any mistakes and you have shown a profit over a 6 to 12 month period, then you just might be ready to go live with a real account.
Only go live once you have a solid understanding of the markets, have a tried and proven strategy and have learned the humbling lessons that come with forex.
Of Course, some emotions may not be as real as they can be with a live account, but that is the leap of faith that will get you for a beginner trader to a pro trader (something I have not yet mastered myself).
If you think you have what it takes to go with a real account, start small ($1000 to $2000) will do. If your proven strategy works well again; then you can start upping the ante bit by bit.
Again, if you do think you are proficient enough to make money, do not go and put all your savings into a live account.
Doing that is a sure fire way of failing, and it won’t be because your strategy sucks, but because you are operating with fear, anxiety, and stress.
Only put into your account money you do not need, i.e., money you do not fear losing.
Some Useful Resources To Learn Forex Trading
Last but not least, I would like to give a special mention to 2 sites that have taught me a lot about Forex and sites that I visit daily for how-to tips and technical analysis.
The only ones you should be looking at right now if you are a beginner are:
Both of these sites are packed with solid information, and they are also tailored to all of us beginners.
Thank you for reading my post, I hope this short read today has shown you the importance of practicing forex trading with a free account and I wish you look in all your future trades both as a demo trader and a live trader.
If you’d like to read more about Forex and my experiences with it, please visit the Forex trading category on my blog and let me know if I can assist you in any way.
I look forward to hearing from you.