Because forex FX is a decentralized market in which dealers disseminate their own price feeds through proprietary trading platforms, it is crucial to learn the features and idiosyncrasies of each type of trading software before committing real funds to an account. Fortunately, in retail, FX traders can test out each platform using demo dollars. Every reputable dealer in FX allows potential customers to download a free demo version of its software. This is critical if the customer is to become acquainted with the platform's layout and the means of order entry. Here we'll discuss the importance of demo trading and let you know what you should look out for when trying different platforms. Basic Versus Integrated Platforms Looking at the trading screen images, you can see how some platforms integrate everything from charting to news, while others have very simple layouts that focus only on price quotes, order entry and reporting. Placing Orders As a traderyou should always try out dealer demos before trading live - it's the only way to become familiar with the different features of various platforms. For example, some platforms simply use pop-up tickets, while others actually mark the order demo on the chart. Typically, to buy a currency pairyou simply click on the offer part of the quote the askand to sell, you click on the bid part. Free platforms allow you to choose market or limit orders after the quote window pops up, while others force you to make your selection beforehand. It's a good idea to place at least 20 demo trades on each platform before trading actual money, just so you can master the specifics of order entry on each platform. A trader should never trade live unless he or she can confidently answer all of the following questions:. The Taxman Cometh One function that most new FX traders overlook is tax reporting. Because FX is a global, unregulated market, dealers as a general rule do not provide any documentation to the tax authorities in the trader's country of residence. Tax reporting is solely the responsibility of the trader. Dealers simply produce detailed transaction histories - in an electronic format - from which the traders must then compile their own tax reports. Such an arrangement clearly calls for a trading platform with highly organized and flexible reporting functions. But reporting quality varies greatly from dealer to dealer: Note the different approaches to reporting in the following platforms:. Figures 7 and 8 - Note how the FXCM platform elegantly separates closed trades, outstanding orders and floating positions and then tidily summarizes all the key activity in an account summary. Some FX traders may generate as many as 1, trades in a year. A platform that reconciles all those trades into an easy-to-understand, end-of-year income statementbreaking down all profits and expenses, can be invaluable. Reporting, though hardly the glamorous part demo FX trading, is a crucial part of a trader's personal record keeping and can have significant tax ramifications. Tax treatment of currency trading is very much free on the individual's tax status. Most dealers will not advise you regarding tax matters, nor should you take their advice if they do, because they lack the expertise to deal with the multitude of tax authorities around the world. You should always consult with a tax professional before choosing a course of action. A final note on taxes and reporting: The devil is in the details, which can determine the difference between profits and losses. Trade Like It's Real Once you have mastered the mechanics, you can use the demo platform to experiment with various trade sizes and styles and determine your trading personality. Are you a short-term momentum trader who likes high leverage and tries to capture point intraday moves? Or do you prefer using smaller sizes to hold longer-term positions that could potentially yield hundreds of points? Demo trading can help you discover what type of trading suits you best. Always remember, however, that demo trading is in no way similar to trading real money. To make demo trading as productive as possible, you need to trade the demo account as though the money were real. The Bottom Line Even after you decide to trade live, demo trading can be very valuable. Many successful traders will test strategies and set-ups on practice accounts before they try them out with real money. Although demo trading will not guarantee you profits in real life, almost all traders agree that if you cannot first achieve success on a demo, you are almost certain to fail in your live account. This is why demo trading is vital to the growth and development of all FX traders. Dictionary Term Of The Day. A account technique used to measure and quantify the level of financial risk Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Free Prep Series 7 Exam CFA Level 1 Series 65 Exam. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Demo Before You Dive In By Boris Schlossberg Share. Figure 1 - A very straightforward platform from FXCM. The primary account is on execution - quotes, positions and account balances are all clearly marked and visible. Figure 2 - A more integrated platform from Oanda that tries to combine quotes, charts and account balances all on one screen. Figure 3 - Another integrated platform, this time from FX Solutions, that squeezes a trade summary, quotes and market news headlines all into one forex. A trader should never trade live unless he or she can confidently answer all of the following questions: How do I place a limit order? How do I set a stop? Can I set a limit and a stop at the time of entry? Are the spreads on the platform fixed or variable? What is the lot size that I can trade 1, units, 10, units,units? Can I mix and match the lot sizes? Can I call the dealing room directly if my internet connection goes down? Note the different approaches to reporting in the following platforms: We go over the ground rules and trading resources needed for demo undertaking. From signing on, to charting and trade management, learn how to trade the forex market with FXCM's online trading software. In FX, it's not the price environment that decides this for you. Learn the differences to see which you prefer. Whether you're puzzled by pips or curious about carry trades, your queries are answered here. Learn how to build your investments with Scottrade's advanced online trading platform. A trading platform is a piece of software that acts as a conduit for information between a trader and a broker. There are many different types of forex accounts available to the retail forex trader. Demo account are offered by forex A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage A measure forex the fair value of accounts that can change over time, such as assets and liabilities. Mark to market aims A simple, or arithmetic, moving average that is calculated by adding the closing trading of the security for a number of time An investment that is not one of the three traditional asset types stocks, bonds and cash. The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Forex Territories No thanks, I prefer not making money. 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HOWTO open a Demo Account on your Phone to Trade FOREX (MT4 Tutorial)
HOWTO open a Demo Account on your Phone to Trade FOREX (MT4 Tutorial)
The Undersea and Hyperbaric Medical Society (UHMS) is an international, non-profit organization serving 2,000 members from more than 50 countries.
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