It's quite the convenient time for me to mention how the forex trading contest is going considering I'm currently in third place.  I'll remain positive with the thought that I may be able to hold here or move up.  It's not going to be easy considering how well Davor Babic is doing with a return of over 11% in the first 8 days of the contest.  TJ is in second with a return of 8.57%.  Like I said, I'm in third with a return of 6.87%, with Uri right behind at 6.09%.  

2008 has started off very productive for me with the release of http://www.brokerontop.com and the first beta of my position size calculator.  Trading productivity hasn't been too shabby either.  I'm managing to take this FX Game account seriously which I normally do and my real money trading account is currently up about 5%. 

There are a couple of reasons why you may want to consider trading forex using a demo account:

1. To simply learn how to trade Forex for the absolute beginner
2. To forward test additional strategies or systems that you're currently working on
3. To increase your level of confidence especially if you've been in a rut (sometimes it takes some unneeded pressure off)
4. To try out the trading platform of a broker you're considering trading with

I truly believe trading a demo account is just not worthwhile if you don't take it seriously.  If you're an absolute beginner, I can understand if you just start placing trades every which way because there is a learning curve that you need to overcome.  If you've been trading for a while though, you really need to trade your demo account just as if you would trade your real account even if you haven't used real money yet.  Here are some tips on how to do this:

1. Open a demo account with a realistic amount of capital.  Why open a $100,000 demo account if you know you're not going to have that amount of money when you start trading for real. If you can only afford a $500 real mini-account then open a $500 demo mini-account.
2. Risk a realistic percentage per trade (1-2%) and resist the temptation to try something you would never do if this was real money.  Use a realistic amount of leverage.  If you're testing some new money management strategy, you may have to break this rule.
3. Think of your demo account as the only way of gauging whether you're ready to commit hard earned money to trading forex.  If you can't make money trading a demo, then there's a pretty good chance you're not going to make money trading a real account.
4. It's understandable that if you're trying out a new strategy or system, you may be trading more often than if you were trading live but continue to hold true your money management principles.
5. Join a forex contest if you need some competition to motivate yourself.

Read or add comments about this item.

No. 1 : I agree with you

Hi Rich,
I completely agree with you, I thought it would be fun to play around with the Forex contest but when you have a demo account, it\'s hard to take it seriously.
I am currently in 3rd place... 3rd place from the bottom that is! I am just putting on trades with a limit and stop and hoping for the best! Of course, in real life, I wouldn\'t do this!

Submitted by Forex Trader • 2008-01-10 17:38:14

No. 2 : Indeed

Thanks for the extra bit of motivation. Demo accounts do serve their purpose.

Submitted by Forex Videos • 2008-01-27 12:35:09

Please keep your comments brief and on topic, and remember that this is not a discussion thread.
Name :		Website :
Title :
Comment(s) :
Verify :		How many letters are in the word FOREX ?