Frequently Asked Questions about Forex Practice Accounts

Everyone keeps asking “What is a Forex practice account?” Most people in the know will answer that it is an added functionality in a forex trading/trial account. And that it allows you to practice trading without the actual risk of losing money. Then comes the other questions... This article will address some of the more common follow up questions to the definition of a forex practice account (demo account).

Where do I buy a practice account?
You don’t buy one, you rent it out. This is because a practice account comes hand in hand with a forex account/platform. The former is accessible via membership, usually with a monthly fee. Now that’s cleared up, you have two options. Either sign up with a broker that provides a free platform or sign up with a forex platform.

Can I get a practice account for free?
Yes you can. This can be had using two methods. The first is to sign up for a trial account. The disadvantage is trial accounts only last for about 30 to 90 days. This means your free practice account will last just as long. Of course, there is the alternative of going around signing up for demo accounts each platform at a time. But this will be very inconvenient, and after a few years, you will have exhausted your options. This is because they identify your URL and sometimes, even the CPU’s serial number. This means you either sign up or buy a new CPU.

The second method is not actually for free, but technically it is. This is because you sign up with a broker. This broker will charge you a fee. However, in exchange for the fee, you get the services of the same plus a forex platform. Of course you get more by way of service but you also pay more in terms of actual dollars shelled out.

Are all practice accounts the same?
Essentially, they are. This is because the purpose remains the same. However, the functionality as well as the interface are different. Also, the access to historical data is different, depending on the provider. And in most cases, practice accounts are tweaked in order to function just like a particular platform. Therefore, in reality each practice account is different in feel and in its efficacy.

What is the best practice account?
The answer depends on your needs as the broker and the forex account the same is tied up with. For example, if you are looking for an autopilot type of account and you are a team player, then you may want to consider Currensee. If you are more off a technical analysis kind of trader, then Multicharts is your primary consideration. If you are an FXPro kind of trader, then cTrader is a good choice; provided of course that you take into consideration the generation of platform it is working with. For example, practice accounts with third generation platforms are almost always better.

How do I maximize the use of a forex practice account?
This advice will not come as a surprise to you. You only need to do three things. The first is to read the manual. The second is to practice regularly. The third is to analyze what you did right and wrong, then repeat.

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Posted By donaldperkins : 20 September, 2020
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Trading is all about taking a risk based on incomplete data and becoming an expert at this should lead to profitability.Learn from the mistakes you make but make sure the lessons are the right ones.Using historical charts can lead us astray because in hindsight, everything is obvious. So how do we avoid thinking that the past will equal the future?Learn from the mistakes you make but make sure the lessons are the right ones. – James BoswellBe An Expert Hindsight TraderLooking back on the market in hindsight allows us to see the obvious, but only because we have all the facts at hand as to what subsequently happened. Reviewing the market like this is useful to the extent that you can see how it developed in respect to your various reference points.But if you are trying to achieve the ultimate goal of being consistently profitable, then is this what you need to be looking at?My argument is no, it’s not and here’s why.When a trader who is either yet to be profitable or is struggling looks at what has happened and why they lost money, they are looking for what they “should” have done in those specific circumstances. Emotion leads the mind to looking at the “nice” moves and ignoring what didn’t work.We will find what we seek and if all we are looking for are the places we would have made money, that is exactly what we will quoteIn my experience, this unfortunately leads to a right or wrong type attitude and masks the information salient to making positive changes to your trading.You Can’t Ignore The Ones That Didn’t WorkWhen you search for what works in this way, you are kind of doing a form of curve fitting and skipping over the places where the same things did not work. This leads to the tendency for denial when a trade doesn’t work even though it looks almost exactly like that one from yesterday that was a great trade.Remember, you’ve probably missed those times when in the same period, the trading setup didn’t work at all or at least spent much more time looking at the ones which did work. Then you get the emotional stuff come into play which we all know about.Trades don’t work sometimes regardless of how perfect the set up is. If you have done proper testing, you’ve seen the expectancy of your trading strategy including how many losses your trading system can take.Denial in trading in terms of skipping the losing trades and only seeking the winning trades, is deadly.But You Can’t Ignore HistoryLooking over historical charts is important and I do it just as I’m sure you do too. But using it to identify the market’s current behavior or to work out why you didn’t make money, are not always the same thing.So what is the salient information?* Where you traded and whether it was according to your plan is a start.* What your overall emotional state was at the time* Where your stop should have been and if you took it* Did you exit in a timely manner or hold on for too long/too short a time and what made you do this?* Where else might you have taken trades within (or outside of) your plan and what would the result have been?None of these things are about where the best trading opportunities were. We don’t know for certain how good a trade will be until it is completed. Historical charts can and will make your view biased if you’re not thinking in this way.Think of historical charts as potential…not probability.The quote at the beginning of the article is one I always try to remind myself.

Visualise yourself perfecting your trading method: spending countless hours working on a perfect system that has a 90% win rate and small losses. You study, study, study, and study again. At a certain point, the back-tested results give you the confidence to take it live.After a few winning trades, you get stopped out. Instead of taking the loss as a natural occurrence in the markets, you try to "weed out" the imprecision in the system that caused this loss. You stop trading, go back to the drawing board and tweak the method.If you can resonate with this situation, know this: no trading system is perfect and losses cannot be avoided. Many aspiring traders simply cannot accept this reality. Driven by fear, they tweak and mess up solid strategies, causing them to fall off the learning curve.Show me the moneyWant a solid strategy for interacting with the markets? Play volatility breakouts. When you see price consolidating in a shallow manner, get ready to play the break out of whatever tight range has formed. (Preferably in an established trend.)   USDCAD Daily Chart. Source: Pepperstone MT4 Sounds simple, right? Tips like this have lured many aspiring traders to risk hard earned cash in the markets, without fully appreciating the fact that by no means is it a perfect strategy. In fact, it's not even a strategy in itself. It's only a part of a strategy, because it doesn't tell you:Where to exit if the market moves against youIf & where to exit (if & when the market moves in your favour)How much to risk on any given signalWhat kind of consistency the signal hasBut these considerations seem to be "tedious" and "boring" for most aspiring traders. So what happens is something like this:Read the magic formula: buy/sell volatility breakoutsScour the charts for situations that look like setupsRisk 5% (or more) on each setupGo to sleepWake up brokeInitiate revenge trading until savings are depleted.The people that actually stop themselves before it's too late are still in the game, but they can be frustrated and find it hard to hear the hard truth:"…you were on the right track, but you really did not understand what you were doing. Furthermore, you were risking way too much, and had no idea how to manage your trades. Trading is more complex than simply clicking a button after certain conditions are met."A lot of aspiring traders go on a quest for the Holy Grail system. They think this "perfect" system will give them tremendous results with minimal effort. Ultimately this will only make life harder rather than easier, because there really is no perfect system. There is no "best fit", nor is there anything like "one size fits all".Adopt Solid Setups"We don't actually trade the markets. We trade our beliefs about the markets". – Van Tharp, PhDIf you believe there is a fail-safe way of raking in constant profits, your belief is not in line with the way the markets work. You will be constantly frustrated because your belief will take you on a never-ending journey of trial & error. This is also known as a wild goose chase.It is important, early on in your trading career, to understand that no method is perfect. Every method is appropriate only in certain situations, and has advantages and disadvantages. The experienced traders know that the real key to trading performance is to understand what you're doing and why you're doing it.With that said, let's explore some solid setups, and discuss how traders are able to mess them up.a) Volatility Breakouts   USDCAD Daily Chart. Source: Pepperstone MT4 Volatility expands and contracts in a cyclical manner. A volatility breakout strategy is based upon finding those moments when volatility is dropping, and stalking a breakout – usually in the direction of the prevailing trend. It is a profitable strategy that continues to be employed by many market professionals.And yet, the quest for perfection can invalidate its edge. How?Playing volatility breakouts against the trend. These typically have a harder time performing, relative to breakouts in line with trend.Playing any breakout, without factoring in volatility. Typically, volatility breakout days close in the upper range of their 20-Day ATR.Risking too much on each single trade.Striving for perfection; using too many indicators and filters. That is possibly the easiest way to dilute any potential benefits of the method. b) Trend Following   USDCAD Daily Chart Source: Pepperstone MT4 Trend following, at its core, is all about letting profits run and cutting losses. Playing pullbacks that do not violate the peak/trough structure of the trend, or breakouts in line with the trend, are two ways to follow a trend until it ends. But it's also quite easy to mess things up. Consider:Impatience. Following trends for quick pips is like using a Ferrari to go grocery shopping around town. You never use its full potential. Take the following example:   USDCAD Daily Chart Source: Pepperstone MT4 You see price starting a new trend in February 2016. A simple Stochastic Oscillator can help highlight potential high-quality pullbacks to help you engage with the trend at value. You see that the Daily peak/trough structure is still in place. So you decide to switch to a 1H timeframe to "nail the entry".   USDCAD 1H chart. Source: Pepperstone MT4 However, once on the 1H chart you also see all kinds of potential "trouble" zones. You lose track of the fact you're playing a pullback in a Daily trend, and you get caught micromanaging a potentially longer-term trade.Playing every breakout in line with the trend. Of course, qualifying breakouts (perhaps using volatility breakouts in line with the trend) is much better than playing everything & anything.Entering with a limit order at your "perfect price". See the example below:   NZDUSD 4H chart. Source: Pepperstone MT4 Many traders assume "patience" means "only wait for the perfect price," where "perfect" is based on some kind of price pattern, level, indicator, etc. This is why we cannot really stalk "perfect" entries."All-in, All-out" strategies may work in some contexts, but with trend trading, it might be better to scale in and scale out. Looking for the perfect entry will oftentimes mean missed opportunities.Confusing timeframes. When trend trading, the best thing to do is to choose one primary timeframe from which you observe your trend. A good choice is usually the Daily Chart. Then, when the Daily is pulling back or consolidating, you can dial down into lower time frames to try and get a better entry.Avoid confusing time frames and trends. A pullback on the daily chart looks like a trend on the hourly chart!Accept ImperfectionThe main idea is that no system, no setup, no indicator, and no method can ever be perfect. Usually, the more traders attempt to "optimize" or "perfect" a system, the more they deviate from the core concept of the system itself.Moreover, the quest for the perfect method usually stems from fear of failure. The correct approach is to work through and understand this fear. It's the mindset that's wrong: not the market.There will always be losses – the only thing to do is manage them correctly: cut the losses as soon as logically possible, and let your profits run as far as logically possible.The correct mindset is something much more along these lines:"I know that my next trade may not be successful, but I know that in time, after many attempts, on balance I will be positive."Have a plan"If you fail to plan, you are planning to fail." – Benjamin FranklinAt the end of the day, trading systems & setups are useful to build a strategy. Like any professional endeavour in life, in order to tackle the markets, you need a plan. The key is to have a plan that can be corrected and adjusted, based on the feedback (i.e. results) that you get when tackling the market.Don't search for perfection; search for understanding. Become an expert at one strategy, and build a solid plan around it, having faith that whatever conditions the market may present, you will be ready to adapt.

The population problem is a big problem in many countries of the world. As the population grows, so does the economy. Most of the growing population can trade forex by acquiring technical education. The population can turn into manpower. I think we can do a lot by acquiring technical education. If we all try we can do a lot because we have desktop and laptop computers in every family. Many of us just waste time playing computer games. At present, our 4G internet has spread widely. Many things can be done only if we the people are aware. Forex leaders can play an important role in transforming the population into manpower. We can get help from Forex to solve the unemployment problem. Forex trading can solve a country's unemployment problem and turn a country's economic wheel. There are many educated unemployed who can create their own business by trading Forex.     In order to convert the population of the country into manpower, the forex market has to be spread. People need to be made aware that everyone can solve their own unemployment and economic problems by doing this forex business. There are a lot of highly educated unemployed people who can't even get a job according to their own qualifications, this huge population can enter as a good professional with forex training if they want. Since Forex Online is a reliable independent business you can trade anywhere and anytime. If you want a high-profit rate here, you can take this opportunity. The population of many countries is growing day by day and at the same time, the number of unemployed is also increasing. If the governments of those countries take the initiative to help this huge number of unemployed people to trade Forex, then this huge population will become manpower. Forex is the world's largest international currency buying and selling market. By doing business here you can turn the corner of your life. If unemployed youth can be trained with forex trading then something good can happen. It can play a big role in keeping the economic wheel of the country moving.This requires a good training center, now that everyone has internet at home, if you patiently learn from the internet from various forex forums, I think one day you too can be a good trader. You can start a business by investing whatever you want.     Unemployed people are living a very frustrating life and their lives are being ruined in despair. You can get rid of all this by trading Forex. We can make ourselves and our family happy by earning a lot of foreign currency from Forex. We can get rid of unemployment and present ourselves as an established person in society. Despite the fact that Forex is such a popular business, there are still many people who do not know much about Forex, so if we can spread the word about Forex in different media, more people will know about Forex and will be very interested in learning Forex. And the government of every country should encourage the people of the country to forex and help everyone accordingly. If we can turn the unemployed people of this country into manpower, the country will move forward to make rapid progress. I think the forex trading business is a big useful friend for the unemployed.

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