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Forex Practice Account: It's Importance
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Forex is simple and yet complicated at the same time. Very ironical one must add. Once you are able to grasp the basics you can easily start trading and making big money. But at the same time, forex is a very vast subject requiring hours of reading and market analysis to bring out the best results possible.
It's just like any other game or discipline. For example, before you start playing golf you practice around a bit. Learn how to handle some important game plays and tactics. This builds up your confidence and then you can enter the main golf course to start playing with the pros and semi-pros.
Similarly, if you are just starting out on the forex market, it's always prudent to start off with a practice account. We will see what exactly are the features of a good practice account, its essentialities and how best to make the use of it.
Opening a Practice account:
There are many brokerage firms who will readily help you in opening a practice account. Almost every newbie has the option of starting a practice account along with his main account. Try to avoid the firms who don't give you a practice account.
Features:
A practice account has almost all the features of a regular forex account. The firm gives an imaginary deposit in your account varying from 25000$ to 50000$. The practice account is just like your main account. You can choose your pip, spreads, leverages and other tactics just like how you do it in your main account. You can observe the real time market changes as it happens and accordingly make changes in your portfolio.
Advantages:
The most important advantage is that the money that you are playing with is imaginary. In case of any actual loss in the forex market, you won't be losing anything because the money is not there in the first place! You can get a first hand feel of the market, devise and revise your strategies and much more with the help of a practice account.
Limitations:
A forex practice account has got its own limitations. Most importantly, many of the firms put a time limit for the practice account varying for 15 days to one month. In addition to that, once your imaginary money gets over in the practice account, then it's done. No more additional practice amount will be added to it! In addition to this, there are other forex risks and pitfalls to which a practice account is generally not exposed. So although a practice account gives a good picture of the forex market, it does not give the complete picture for most!
Practice makes perfect goes an old adage. And it rightly applies to the forex market also. You must learn the ropes and learn to crawl before you walk. You sure are not going to lose anything from a practice account for sure. So, call up the best brokerage firm around and open your practice account before starting off.
