Broker to Trading

One way for the beginner trader to approach Forex trading is to study trading beforehand. This can be done for example via a course and/or studying books on trading. Then the trader can open a demo account at a Forex broker. A demo account is free, that is the trader does not need to deposit funds to use it.

The demo account uses virtual funds, which is not real money and cannot be withdrawn. The virtual funds in the account may be considerably greater than the real funds the trader will later trade with on the live account, which can be a factor as the capital in the account, real or virtual may affect the way a trader trades, allowing greater or lesser room for retracements for example.

 Retracements are moves opposite to the direction the market is currently moving in and are part and parcel of the way markets can trace out movement on a chart, consequent on the wide range of factors which may affect the movement of value of a market up or down. As retracements are opposite to the general direction, they can reverse the overall direction of a market or simply be a retracement which corrects itself to continue moving in the overall direction. Markets move in complex ways so what the overall direction might be can be something which is encompassed in a patterns such as a trend or range.

In the case of a retracement, the overall direction might be up (i.e. an increase in value of the market) and the retracement would be a move (which can appear quite structured) then in a downward direction (or vice versa). The structure of retracement can itself create a patterns as part of an overall pattern, which the trader may trade. If the trader believes that retracements are part of an overall pattern they may wish to ride them out and whether this is possible or not can depend on the capital in the account. Thus the capital in the account may affect they way the trader trades for this and other reasons.

Some platforms support automated traders while other do not. The trader may wish to consider that trading with robots is in and of itself an advanced strategy and that they may wish to learn to trade before letting a robot trade on their behalf, if only to be able to choose a robot based partly on understanding what it is doing.

 Robots execute instructions or algorithms which can specify entry, trade management and exit conditions, typically based on an indicator signal, which is to say they trade on behalf of the human trader. Robots can trade without tiring, unlike the human trader and can execute strategies rapidly. Robots may also rapidly create losses or drawdown in the trader's account, even if the trade works out in the end (which it may not).

Robots typically but not always trade using rules the trader may wish to use themselves. For example, the trader can study an indicator and then use it to establish entry, management and exit based on rules. The advantage a human trader has is that they can exercise discretion whether or not to follow rules. Exceptions can be programmed into algorithms, but in order to make algorithms fast and not overly complicated, adding complex series of conditions may not be the best way forward. The human trader may find this is the case also for them when trading at their own discretion, so they may wish to exercise this discretion based on their experience.

The problem for the beginner trader is that they do not have the experience. Which is why they can gain some experience with no risk on a free demo account. Arguably there is no substitute for trading on a real account and when they feel ready the trader may wish to consider trading with a Cent account broker or a broker which allows very small order sizes, thus potentially mitigating risk to some extent, while allowing them to trade on a live account.

A further factor for the beginner is how user friendly a platform is for the trader. The trader may wish to learn how to use the platform on the demo account, but may also wish to use a platform which is inherently relatively straightforward to use. Some brokers offer platforms which are specifically designed to be user friendly. So to pick a free Forex demo account for beginners, this site has chosen IQ Option, which offers user friendly platforms designed for the trader who executes their own trades.

 Fundamental analysis uses information such as economic data to gauge direction in a market, while technical analysis uses charting information, such as technical indicators and patterns to gauge direction. Both are used extensively by traders to provide a rationale for making a trade, but the trader should be aware that signals of any kind can be wrong and because any signal or strategy has worked in the past does not mean it will work in the future.

IQ Option offers the trader the capacity to trade with very small order sizes (from $1) and consequently has a low minimum deposit ($10) for the live account (the demo for both is free).