Learning Forex Trading with a Demo Account

March 17, 2009 by Trader Rich

Understanding currency trading before you start

Because currency trading is so volatile, and because it’s always a good idea to know your market, a demo account can be a good idea. When you learn forex trading with a demo account, you get a good idea of how the market works, and you learn some of the ins and outs that are unique to the currency market. I have enjoyed reading about the forex adventures Dustin at Happiness is Better has been having.

Dustin is learning forex trading with a demo account right now. As soon as he feels comfortable with the whole thing, he’s going to start using real money to trade. One of the more interesting points he makes in today’s update is this one:

An equity position of less than ,000 means that if I were to “cash in my chips”, I would actually lose money on the entire deal. However, that is not how I learned to trade. I will wait until the trade is positive.

He makes a good point. Even though sometimes it is a good idea to cut your losses and try and make up for it later, in some cases — especially during volatile times like these — you might as well wait until the trade goes positive. Of course, the risk is that the trade doesn’t go positive and you lose even more. But those are the mistakes a forex demo account can help you work out. Well, as much as they can be worked out. There is no full-proof way to always make money when forex trading.