Practice / Demo Account Most Forex Brokers offer a free Practice or Demo account, which is the best way to learn if you are new to the FX world. Also, if you are somewhat experienced but feel like trying out new strategies, a demo account is a powerful tool. Even if you know exactly what you're doing but are new to a specific trading platform, our advice is to take the time to check out the demo account. Generally you are given a minimum fictitious $50,000 plus (margin), with exposure of up to $5 million that you can ‘play around with’, (which of course you would not take the full exposure potential as you then run the risk of having your positions automatically liquidated). Taking your time and using this virtual reality trading experience within the live markets is invaluable, and will allow you to become familiar with the particular trading platforms available. By the way, most platforms offer access to your demo account even once you have opened your live account.
Some traders will spend an enormous amount of time studying and planning their Trading Plan, then through impatience of wanting to place their first trades make silly mistakes purely because they are not familiar with, or do not fully understand, the trading platform and its functions. Learning through trial and error with ‘someone else’s money’ is the beauty of a Practice / Demo account. This is the place for a word of caution: just because your results are rosy in a demo account, doesn't mean your real live results will be anywhere near the same. This is because as soon as you have your own money on the line logic goes out the window, and your emotions take over. Traders need to dip their toes in the water of a live account with real money to gain the experience firsthand and understand how their emotions will surface depending on if they are making or losing money. Live Account Opening a Live Account is a relatively simple process, which involves verifying personal information. This is done by completing the trading platform's application form and supplying the necessary proof of identification and residence which can range from items such as drivers license, utility bills, and bank statements. These vary depending on your country of residence and the trading platform. Applications and accompanying documents can be faxed, emailed or mailed. Some trading platforms do not require a minimum opening balance, whilst others do. These can be around $2,500 minimum for a standard account and $250 for a mini account.
We will now explain the main differences between the two.. Standard Account Standard accounts have a minimum trade amount of 100,000 lot size, and full platform access to trading tools such as calculators and currency converters and technical indicators such as RSI, MA, Elliot Waves or Bollinger Bands to help you analyze market trends and directions. Mini Account The mini account is great for traders who want to test their trading strategies with real money on the line before risking more sizeable money on the Forex market. Most accounts can be opened without a minimum, however some require a balance somewhere around $200 and margins as low as 0.5%. These platforms allow you access to real-time charts and minimum lot sizes of 10,000. Trading Platforms Most Forex dealers offer a few variations of access to their trading platform, such as; a Windows-based platform downloadable to your computer, a web based platform accessible from any computer or internet cafe, and even wireless access right from your cell phone. The trading platforms will allow you to view real time prices in all currency pairs, they have easy execution of your market orders with a single click, enable you to track your profit and loss of both open and closed positions in real time, utilize their charting and advanced technical analysis tools, use various order types (as discussed in more detail below), plus allow you access to fundamentals such as daily and weekly research reports, with up to the minute news headlines and market commentary. Again, make sure you research the different trading platforms available, since there are many popping up all over the place. A platform with a good reputation will allow you more trading options, will better accommodate your needs and is more reliable. Interest Debit & Credit When positions are held overnight there is a cost of carry appointed to the account (interest), which differs depending on the currency pair. Another factor is whether it is a Long or Short position as long positions are debited the fee (higher rate) whilst short positions are credited the fee (lower rate). Most trading platforms calculate the interest second-by-second and debit/credit daily, which is different to other financial markets who only calculate interest at a minimum on a daily basis. When the position is held overnight it will be rolled over the following day. A rollover is where the current position will be closed at the current value of the day and then opened the next day reflecting the new price that takes into account the interest rate differential between the two currencies. The important thing to remember is that with currencies you are ‘long’ one currency and ‘short’ the other, so you will be debited interest for your long position and credited interest for your short position.
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