Forex practice is basically the only way you can improve your trades consistently over time. There are millions of books and videos out there that claim to turn you into a Forex master overnight; while many may contain valuable insights the only way you can truly become a successful Forex trader is to practice. Forex practice gives valuable experience as well refining a trader’s most valuable asset – their instinct.
Forex practice is made possible by advanced trading platforms like Metatrader and Forex brokers that offer practice accounts. A Forex practice account is usually free to open and it only takes a few hours to set up and get started. A practice account allows traders to place simulated orders on Forex and other assets/commodities such as precious metals and equities. Your trading platform receives up to date Forex data and bases the results of your orders on this information; this means that figures are completely accurate and as such the simulation is perfect.
Many traders who spend a long time working out strategies in practice mode are attracted to algorithmic trading approaches. These technically minded traders try to identify consistent, repeating dynamics underpinning Forex developments. For example a trader could come up with a theory such as the price of gold goes up by x when the value of the US dollar falls below x. If their theory is accurate they will have identified a way to consistently make intelligent trades. A Forex practice account allows traders to test as many such theories as they can come up with.
Once a trader has gotten an enough practice it’s time to upgrade to a standard account. A standard account means that your orders will be real and so will your profits. However a standard account requires a cash deposit in order to open and any trades you make with a standard account risk incurring a real loss – good luck!