Forex Market: The Importance of Demo Accounts

In the Forex market, it’s very important to practice before investing real money. Whether you are a new operator that hasn’t yet dominated all the variables of the Forex market, or an experienced operator that wants to test new strategies, demo accounts can save you from bankruptcy.

Many think that simulating operations is only for the beginner Forex trader. As a result, many Forex brokers think the same and only offer their demonstration accounts for a limited time. There are other brokers who don’t even offer demonstration accounts.

Although there are still brokers that don’t offer demo accounts, they certainly will come to offer them now that the majority does, and that suggests going in the opposite direction of the competition and practically all new operators need a demo account to begin their operations.

It’s normal for Forex brokers to keep demo accounts for a limited time, generally between two weeks to a month. These brokers consider this the time needed for a beginner operator to familiarize themselves with all of the concepts of Forex necessary for them to feel confident in investing in real Forex accounts.

On behalf of the brokers, this strategy has its logic, because brokers fear that a demo account could discourage the investor if they try it and endure losses for prolonged periods of time. Many users that register for a demo account and only want to play like they would play some virtual game for free on the Internet. There are probably people that visit these simulated accounts like another online entertainment. Brokers are not in the business of providing free games.

New investors are the primary users of demo accounts on Forex, but if an experienced operator wishes to try a new strategy, the demo account provides the perfect place to get comfortable with the strategy before putting it into practice in their real account of operations. If they are testing a new pair of currencies with which they are not familiar, they can try it in their demonstration account. There are dozens of reasons for an experienced operator to use a demonstration account.

Therefore, a new operator should not select a broker that does not offer among their products the use of a demo account, at least for a limited time. It will certainly be a great ally to your chances of success in the Forex market.

Finally, one of the most important things you’ll need to know in the Forex market is the direction of the general tendency. While you could track the tendencies in intervals of 15 minutes, it’s much more useful to concentrate on the weekly graphs.

Following the weekly tendency line, you can see the general direction of the Forex market and where it tends to go. If you draw a weekly line of tendency, you’ll notice that they don’t often break the existing standards. In fact, it’s not too rare for these lines of tendency to last many years. For example, between the years 2002 and 2006 the general tendency of the euro in front of the dollar was rising upward. This is much easier to identify if we look at the weekly graphs and it would be impossible to identify in timeframes of 15 minutes.

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