Why You Should Demo FX Software

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Unlike the stock market, the foreign exchange market is a decentralised one. Because of that, you have to use one or several trading platforms offered by dealers to receive price feeds as well as make the actual trade.

Now if you wish to use a particular platform to trade, it is important that you familiarise yourself with it first. There are a number of reasons why you should do this. Here are some of them:

1. Platforms come in different flavors. While all platforms perform the same basic function, each has its own design and layout. Some will only provide you with quotes, reports and the facility to make orders, while more complex ones can even include market news to help keep you updated.

Because of their differences, you need to be familiar with each platform first even before you make an actual trade. Doing so will help facilitate the process for you, especially when it comes to placing an order as well as setting stop and limit parameters to your order.

2. Test your skills before trading with real money. If you are just a novice trader, you can practise trading first on your demo account. This puts you at a real trading scenario without requiring you to use real money. You can then learn how to trade and use the software without running the risk of losing your money in the process.

Or if you are an experienced trader, you could also use the demo account to test out strategies. A working strategy may not exactly translate to a successful one in actual trading, but you will at least have a risk-free environment to sharpen your trading skills even further.

3. Get to know your trading style. Again, due to its no-risk environment, a demo account can also help you find out what your particular trading style is. For example, you will know whether you prefer being a momentum trader or being one who takes a long-term strategy. All these without putting your actual money at risk, at least until you decide to use your trading style in the real market.

So before you trade real money, demo platforms first. It eliminates risk on your part and you will be able to develop your skills further as a trader.

For more fx tips, check out our FX guides section.

By FX Strategy Team, Published on 16th of April 2013
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