I thought it was about time that I did a good post on how to properly practice forex trading and doing it in such away that it enhances your real trading. Everyone knows of the demo accounts where you can run simulations in the market and test out how things work. It seems like the perfect device that will let you learn everything you need to know without investing a penny. I’ve seen people follow this simple philosophy only to lose all their money when they got into the real market.

The Demo Software is “OK”

It is important to note that the demo software is just okay. It can help in a lot of ways if you know how to use it properly. If you treat it as nothing more than how things will be in the real market, than you’re going to have the floor wiped with you.

The forex demo software typically uses old data for you to run your tests on and that’s fine, but you have to remember that it is OLD DATA. People assume that if a trading strategy worked in the past, than it will work in the future. Maybe, I don’t know. The demo software isn’t going to let you know.

Take all this economic mess we’re in. Things have been pretty erratic with a lot of the foreign exchange. We’ve seen very rapid movements in currencies we never seen move like this before and it is sort of scary. When you use your demo software to test on old data, you’re not going to know if it will work today.

It’s also important to note that information in the old days could alter the data. Who knows if the demo account has a Federal Reserve interest rate change right in the middle of your testing. This could turn a bad trade positive and you would be fooled.

Look, the point I’m trying to make is that when you practice forex trading you’re going to have to realize what you’re doing. It’s old data that may or may not work. Things might come out distorted. There are specific things that you can learn by using a demo software, but you have to be well aware of the learning capabilities.