If you are referring to free forex trading then most people is referring to a free forex demo account. A forex practice account or demo account can be a great learning tool in your journey to becoming a successful forex trader.
The key is to use it the right way, and by doing this learning the right trading habits as well as learning the ins and outs of your trading strategy.
When you use your free forex trading account the right way the transition to trading live with real money will be seamless, and not such a shock for your system and your bank account.
With most forex trading brokers these days their free forex trading account will work exactly the same way as a live account will work. The benefit of this is that you learn how to use your trading platform in a real trading environment. You learn how to enter orders, how to add a stop loss, how to add a limit order as well as how to close an open trade.
All these functions are absolutely vital to know, and it can lead to disaster if you are trading with real money, and you for instance do not know how to close an open trade or know the right way to add a stop loss order to your trade, and the market keeps going the wrong way with you.
One fact that you should know about free forex trading accounts is that orders are normally filled instantaneously – you are in or out of the market the moment you click the close or enter buttons – which are not usually the case with a live forex trading account.
Especially if you are trading a scalping type forex strategy where you only take a couple of pips per trade this can be crucial. What will happen is that the strategy will work very well on the demo account, and you will be confident to start trading live only to realize with a shock that it does not work at all on a real trading account. The lag time from sending the close order to where the order is actually filled can result in a 5 pip profit being a 5 pip loss.
If you are trading such a short term strategy make sure that the broker guarantees order prices – there is some forex brokers that does this, and your problem will be solved.
You can register a free trading demo account with brokers like FXCM, GFT, and Fxsol which will all include free forex charting.
I have had experience with all of the above mentioned forex brokers, and you cannot go wrong with them if you open a free forex account.
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