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The Ins and Outs of Trying Out a Forex Demo Account

Nick Makaryk
Jun 20, 2008
Trying your hand at Forex in way of a demo account is used by thousands of traders and investors trying to determine if Forex is for them. Demo accounts are available widely on line, where an interested person can see how the whole thing works. Playing with a demo is along the same lines as the Pentagon generals playing war games.

You basically have an account, with no real money in it, to buy, sell and trade the same way you would in reality. This allows you to see what is involved without risking any real money. The software for the demo accounts is deeply rooted in reality and you are able to see, at the end of the day, if you have made wise choices or need to keep practicing.

The idea behind the program is quite simple. The investor would have a pretend margin account with $10,000 in it. After studying the data from markets, they think the US dollars will have increased value when compared with the Japanese yen. The program allows purchases on margin, so one hundred thousand US dollars are purchased while selling one hundred thousand dollars worth of Yen. The difference, or spread, is what the pretend profits are.

So why spend your time with pretend accounts? Why not just jump right into it?
Well, it is much safer to learn how to do this complex trading when no real money is risked. While you may not have thought about it, a lot of people will spend hours on top of hours getting their feet wet as it were, before going swimming. A pilot, for example, will spend several hours in a flight simulator before actually taking off in a real plain. A person just learning to drive will practice before going out and driving on the highway.

Practicing with the demo software is the same principal. You have to know what you are doing before taking risks. Spending time on the Forex simulator allows you to gain knowledge, skills and instincts that will be needed when you go out there and risk ten thousand dollars for real.

You can find these demo accounts through most brokerage companies that trade in Forex. The demo may be free or there may be a small fee associated with it. If there is a fee, don't just assume it is not worth your money. Even if a fee is assessed, it is most likely worth your money to practice. You have to have an idea what you are doing before you just jump right in. Spend all the time you can practicing with the demo account. If you deal directly with a broker, an account can be set up quickly. You can go on line to find a wide array of companies ready to set up an account for you to help fine tune your skills. It cannot be stressed enough that time must be spent in the demo account.

Besides making yourself feel at ease, it may help your spouse as well. Mike O'Malley opened a demo account after months of study. Convinced he could make a healthy profit as a day trader in Forex, he spoke to his wife. She was not convinced it was a good idea. After all, with the kids' after school activities and retirement to think about, not to mention the mortgage and other monthly bills, there wasn't a lot of extra money to play with. But after Mike found a brokerage company he felt he could trust, he set up a demo account and handled it just like a live account.

After practice, and several days, Mike was able to make a nice pretend profit. He took that information to Mrs. O'Malley. After she looked it over and understood more about what was happening, she agreed to let Mike give it a whirl. Today, Mike has become quite successful in trading Forex and the two believe this will continue to happen. Oh, sure, there were a few times that Mike made the wrong call and they lost a little, but overall, they are on the plus side. By using a demo account before using real money, Mike was able to overcome his wife's objections and is an active trader today.
About the Author
Nick Makaryk is an Internet Publisher, Copywriter, and Founder of Best Credit Cards A Free consumer credit card comparison site helps consumers find the Best Credit Card while avoiding high interest rates, charges, and fees.
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