Forex Practice Account – How to Get the Most Out of It

By FBrunyee2702 on January 20, 2011 In Currency Trading

Forex practice account is only for newbies; that is what the majority of people believe. However, that way of thinking is not 100% correct. In fact, people who have traded forex for years are still utilizing practice account for other purpose. Here are some ways to use forex practice account:

1. Learn how to trade forex
Clearly, this is the primary purpose of such account (besides promoting the broker service of course). In a practice account, a novice can trade virtual money without being worried about losing anything. It’s also a good place to get used and learning the trading platform of their choice and find out how currency trading works.

2. Testing a broker service
Trading platform is your heart in trading foreign currencies, so using a practice account to see the efficiency of the trading platform is advisable. There are several crucial points to look at here:

– Does it have a good user interface? It’s very important that you could access to any function you need in the shortest time possible and with the easiest possible way. You don’t want to click around numerous buttons throughout the screen just to execute 1 order.

– How about the features? There are a few trading platform that just provide you with simple charting feature and a few indicators, but you can also find others that offer quite advanced features. It all will depend on your trading strategies and the way you analyze the market.

A few forex brokers offer similar trading platform (instance: MetaTrader4 or MT5). In this case, try to have a look at their connection. Is it possible to execute an order without difficulty? Do your stop loss and take profit order were executed properly? Needless to say, the condition may be different in a live account, but it is still a good indicator.

3. Testing strategies, trading signals, and expert advisor
Despite having trading systems that work, an expert trader will always willing to test new techniques and strategies. In a forex practice account, they’re free to test as many strategies and automatic trading system that they want. This is actually important since a mere backtest result cannot ensure 100% that the strategy willl work in the present market.

Note that if you’re testing a forex robot, you still need to spend a little on VPS (virtual private server) to host your robot. In additon, you must be patient. Just because a strategy or an automated trading system yield good result in a week doesn’t mean it can retain it for months. Wait for at least a month before you give your final decision.

As long as you’re still a trader, you’ll need to use forex practice account for those purposes. By knowing and using it wisely, you can avoid losing money from bad trading platform, trash strategies, or useless forex robot and trading signals.

Check out forex trading course and sign up for free detailed guide on utilizing MT4 platform. Also, see forex trading signal for several points to consider before you test a signal service.