Forex Demo Account For Experts
By: Charley Warady
Most Forex brokers offer their clients a Forex demo account. Usually, it is meant for the novice forex trader. It is for the guy that wants to dip his toes into the pool before jumping in and getting eaten by the sharks. Okay, so the odds are probably against anyone getting eaten by sharks in a pool, but using the ocean as part of the metaphor was just too obvious.
It is for the novice that many brokers only offer their Forex demo account for a limited time. Some offer it for a month, and some for up to three months. This limits the possibilities and to a great extent defeats the purpose of a Forex demo account. Of course, if the Forex broker only wants to lure the trader in with a “test drive” then they enter the same arena as any other car dealership they're trying to emulate:
Sell the product and get them out of the showroom. To have a limited time offer for a Forex demo account also limits the amount of tools the broker is willing to make available. Understandably, the broker doesn't want to play host to a horde of people who only want to play the “Forex Game” and never trade a single real dollar.
But like everything else in the market, it becomes a matter of risk/reward. If they want to attract the true professional Forex trader, they should offer an unlimited time Forex demo account. In the end, the trader is going to generate more trades because he tested out his plan first. Everybody wins.
These demos are as much of a tool for the experienced Forex trader as any chart, any technical analysis, or any fundamental news offered in Forex. For a golfer, it's like trying out a new swing on a driving range instead of the golf course.
Every time a trader discovers a new or different trading strategy, there is no reason to immediately risk any real money in his trading account. He should have a way of seeing if he's comfortable with it and it fits with his overall plan. A Forex demo account that is only offered for a limited time is of no use to the Forex expert.
Obviously, it is always a different story once you move from the demo account to the real trading account; just as a golfer's practice swing is always perfect before he puts that stupid little ball on the tee.
Or a batter in the on-deck circle is always hitting home runs until he steps up to the plate. The Forex demo account is meant to give the experienced trader an idea; an inkling of what will happen once he trades it for real.
As long as the trader doesn't take unrealistic risks or treats it like a game, there's no reason why the results shouldn't be the same in both venues. After all, the discipline and non-emotion necessary to trade real money should be applied to the Forex demo account as well.