Given the demanding and decentralized foreign exchange market, it is paramount for traders to carefully research, review and understand the unique features and functions of every type of trading software available to them before they invest any real funds into a Forex account. Luckily, most Forex traders have the opportunity to test out each potential trading platform, using ‘demo dollars’, prior to making any sort of real commitment.
Every recognized broker will allow potential traders to register for, and download, a free Forex demo account. This is of utmost importance and allows trial users to become better acquainted with the layout of the platform and also allows them to better understand the order entry process.
There are a few basic elements that should be taken into consideration when testing different platforms.
Basic vs. Integrated Trading Platforms
Some trading platforms will integrate every process ranging from new to charting, whereas others might have a very basic layout the focuses strictly on quotes, reporting and order entry.
Placing of Orders
Any experience trader will tell you that there is strong value in testing out demo platforms prior to trading live. After all, this is the only guaranteed way to familiarize oneself with the various features of a trading platform without risking capital.
Example: Some trading platforms might mark order location on a chart, and others might use pop-up tickets. Most commonly, to purchase a currency pay, users click on “the ask”, and to sell, they would click on “the bid”. Certain software might allow traders to choose limit orders after the pop-up of the quote window and others may not.
Experts recommend testing out at least 20 demo trades on a trading platform demo prior to trading real funds. This practice allows traders to master the order entry process.
Traders should never place a live bid if they cannot answer the following:
Can I contact the dealing room if I lose my Internet connectivity
Is it possible to ‘mix and match’ lots sizes
What is the maximum lot size I am allowed to trade?
Are the platform spreads variable or fixed?
Is it possible to set a limit and stop at entry?
How is a stop set?
How is an order limit set?
Trade in a demo just as you would if it were live
The purpose of a demo account is to not only allow you to gain knowledge of the inner workings of the platform, but also to see if the platform is right for you. This means that you must use the account just as you would if you were live trading.