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Simulated Forex trading

Demo trading

Learning Forex trading is a long process, which requires a lot of patience and free time. The best way to do it is to open a demo Forex account and trade virtual money. Of course, trading virtual money is much different from trading real money, beacause there is much less fear and emotions. Still, demo trading brings a lot of useful experience and is practiced by many novice traders.

Drawbacks of demo trading

The main drawback of demo trading is the required free time. Most people have work, family and other important activities. Time that can be spent on trading is usually limited to a few hours per day and these are usually not the best hours for trading Forex. Most often we miss the best entry setups or we have to close our trades prematurely or leave them unattended just because of the lack of time. This makes the learning process longer and harder.

What is simulated trading

Simulated trading simply means replaying the market. Historical data for most instruments and timeframes is usually easily available. Why not use it for learning? You may say that the market is constantly changing and it will never be the same as it was in the past. This is true, but there are patterns and situations that repeat over and over again. They can be spotted and learnt during the simulation.

There are several computer programs designed for trading simulation. Some of them are standalone applications, like famous Forex Tester. Others are add-ons to existing platforms, like Soft4FX Forex Simulator or MT4 Trading Simulator Pro. They are both Expert Advisors, which can turn Metatrader into a trading simulation software.

The main advantage of using a Metatrader add-on is that you can use any existing MT4 indicators. There are thousands of them and every trader has favourite ones. Standalone applications may not allow us to use them. Moreover, we can use MT4 templates to make the chart look as we like it.