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Learn By Hands On Forex Trading: Demo Accounts Vs Mini Accounts

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If you are new to Forex, you are likely overwhelmed by the sheeramount of information you are finding about currency trading.Although the concept of trading the currency markets is simpleto understand, the actual trading methodologies andunderstanding of how, why and when trades are executed can behard concepts to grasp and fully understand. If you aren't awareby now, forex trading is not without substanial risks. There are several schools of thought on how a new trader shouldprogress from learning to actual live trading. In this articlewe will discuss the best ways for a new trader to learn how totrade the forex and make their first live trades. To start out, I can not stress enough the need for hands ontrading. This is why you will often hear it recommended that newtraders start trading with a demo account. What is a demoaccount? Many online forex brokers offer something known as a"demo account" which is a fake account that you can trade untilyou feel comfortable trading your own funds. Demo accountsbehave just like real accounts, the only difference is that themoney you are trading is not real and no actual trades are everexecuted. The purpose of using a demo account if you are new to Forextrading is to get you comfortable making trades and to help youbecome familiar with the brokers trading platform. You can cutyour proverbial teeth so to speak without risking any of yourown funds. This makes demo accounts good for a brand new traderwho just wants to see how trading works. There are somedrawbacks however to using demo accounts to learn Forex trading. The biggest downside to using a demo account is that you willlikely only be able to trade standard size accounts with a demoaccount. If you intend to trade mini accounts, as many beginningforex traders do, a standard size demo account is going tobehave differently than a mini account. Your margins are verydifferent for a standard account versus a mini account. If youbecome accustomed to trading a standard size account, yourtrading methodologies will show it. This is because the largermargins offered on standard size accounts allow you to takegreater profits from smaller movements in currency prices. The other major downside to trading with a demo account forlearning forex is that as a trader, you need to carefully managethe emotional aspects of trading real money. Since a demoaccount is fake money, detachment is easy to come by. Once youstart trading your actual funds,

you might just find that yourtolerance for risk is much more conservative. Ideally, as youare learning to trade you are also learning how to manage yourrisks most effectively. So what is a beginning trader to do? What is the best way tolearn to trade the Forex, hands on? Once you have read, studied, and completed any courses on Forextrading that you may be taking, you are ready for probationarylive trading. The single best way to trade the Forex is to justDo it. Now, this does not mean to jump in and trade a full sizeaccount with real money, this would be an enormous risk for anew trader and not a very smart move indeed. What you can do isto find a broker that offers mini accounts. Mini accountstypically start at $200 and typically give you 100:1 leverage.That said, as of this writing, there is one broker (Easy-Forex)that allows you to trade a live mini account for as little as$25. For less than you paid for any of your books, courses ortraining materials, you can actually try live trading. You willbe amazed at how after just a few trades, the stubborn conceptsseem to start making sense and you begin to understand Forextrading. Now, if you do decide to begin your trading with one of thesetiny mini accounts, you should start by making several verysmall trades. You should also be trading with the same system ormethodology that you are trying to perfect. Your profits willlikely only be a few dollars since you are trading on a smallmargin. This is good, however because the reverse is true aswell, you are only ever risking a few real dollars. If youhappen to have a series of loosing trades and wipe out the fundsin your demo account, you can consider it the least expensiveeducation you could possibly get in actual forex trading. Muchbetter than loosing large sums of funds, and more realistic thantrading a demo account. Just learn from the experience, andconsider it a good deal on a valuable lesson. Once you are comfortable trading your mini account, you canalways have it converted to a regular account (with anadditional deposit) if you choose. Overall, it cant be stressedenough, the best way to learn the Forex is to have experiencewith live hands on trading. This article showed you ways thatyou can do this at a minimal cost and with the smallest amountof risk. About the author: New to Forex? Check out Our Free Forex Training or readthese Forex Articles. Looking for an easier way? Learn More about a Managed ForexAccount

Written by: Amber Lowery

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