How effective is a Forex Demo Trading Account?

One of the main highlights for most Forex broker-dealers and FCMs offering currency trading is their respective trading platforms and Demo / practice trading accounts before engaging into actual currency trading.  As we all know that the standard bearer is the MetaTrader 5 Version and similar software trading platforms that uses the most common technical tools integrated into the system. 

Listed below are just some of the reasons why Demo Trading accounts are encourage specially for new traders category. And find out what are certain issues that needs to be addressed while in the process of learning and asking the right questions on the flow of orders through an online trading system. With a few probable exceptions, of course for the simple reason that trading programs are only as good when good results are made. And when it doesn't traders try to find other reasons for their failures or mistakes.

    • To familiarize new traders the value of having to practice currency trading without loosing actual funds in their trading accounts.
    • Learn How to analyze Fundamental and correlate them with the Technical factors affecting the Foreign Currency Market. 
    • Learn proper trade executions and types of order process while understanding the currency pairs through certain chart price patterns and their respective technical analysis & interpretation.
    • Since most demo or practice accounts are intended for new traders, experienced traders can also use it to fine-tune their trading skills and strategies in a simulated trade before any actual positions would be done once they have a live opening account. 
    • However, for retail trading; micro and mini trading accounts are widely used and should be limited only for those who can risk smaller increments for loss. Trading is not meant for everyone, and can not be treated as a one size fits all style of trading. One has to have the right reasons for trading the currency market and making money is only one of those reasons.  
    • MegaTrade101 do enourage to have at least two trading platforms for price comparison and accuracy. As there would be certain times that there would be price discrpancy between registered Highs & Lows that we have encountered with other trading platforms. Spreads do differ specially with the fifth decimal point in place. Tighter spreads may well be claimed but it does work both ways not only for the trader but for the broker - dealer as well.
    • Remember to treat the fifth decimal point as a fraction rather than a full pip or point value. As other, so-called training academy on forex trading would claim a 400pips average profit per trade on ten consecutive wins as a trading thesis to graduate. While each trade execution is actually just 40 pips. These are just one of the ploys and statements made by newer trainers to get new student to enroll. Watch out for schemes such as this.
    • As for Price Accuracy and Flow of Orders in LIVE Online trading, make certain that the flow of ticket (transaction #'s) orders from the trading platform are actually registered and submitted to the appropirate governing body or agency that each broker-dealer / market maker as a regulatory requirement for transparency and legal compliance on trading to the CFTC / SEC or an equivalent regulatory agency that oversees trading activities local or foreign. Since trading platforms and ticket orders are self-generated, it is vital that all orders executed in their respective algorythms during trading are rightfully registered upon live activation for compliance and not merely bucketed to another unregistered computer location.
    • Once traders graduate from the retail side of trading and would have the chance to use EBS, Reuters Dealing System, Bloomberg FX terminal or even Currenex trading systems for Institutional money managers would be an awesome feeling knowing that one is in another world of trading transparency done with live audio dealings in Asia, Europe & US sessions through the Interbank Markets. For now, try to make use of what is only available and make the best of it.      

Other pertinent information are equally important, however these are just some of the positive contribution for new trader category in learning how to trade the currency market. On the other hand, a cautious approach with the proper guidance from a qualified authority / mentor can best serve new traders with the right orientation in trading and a simulated trading or practice account can never be comparable with a real live market account. Likewise, a Demo competition challenge has its own merits and de-merits amongst those who join such competition.

Remember, there are always two sides of the coin! In an ideal world, consistency in winning trades are great especially when consecutive wins are made while doubling fresh new trading accounts. But when reality check comes in with a loss; then this is where due diligence sets-in with little acquired knowledge can sometimes be more dangerous. Always keep your foot on the rocks of reality!