A trading simulator could be your most effective advantage when deciding how and where you will invest your money in the market. Most traders are not successful in foreign exchange, and a conservative estimate of the number of people who lose money is 90%. Even though this number is quite substantial, the potential for making money within the foreign exchange market makes the probability of loss an acceptable risk. So, how can you minimize your risk and increase your chance of turning a profit in the largest international trade on the planet? The key is utilizing a trading simulator before ever putting any of your hard earned cash on the line.
A trading simulator is essentially a real time simulation of a broker’s trading software. Most brokers will offer you a test drive of their trading platform with real time price quotes to get you familiar with their system. They do this to make you more comfortable and thus more likely to invest in their firm in the future. The great thing about it is that you can use it to test your personal strategy and get a rough idea of the real time spreads with a given broker. This is a priceless advantage, because many brokers advertise a given spread and instant execution only to allow significant slippage and larger spreads when you get in the market. Although a trading simulator will not allow you to know exactly how your broker will manage your real money, it will give you a good and valid idea in most cases.
Getting familiar with your broker is extremely necessary considering there are thousands of brokers available while only a few of them are reliable. Reliability in the foreign exchange market is priceless.
The other major advantage of the this type of simulator within foreign exchange is a sandbox for you to test all of your trading strategies and theories without risking any capital at all. Never underestimate the importance of understanding the strengths and weaknesses of your personal trading strategy and style. The simulator will allow you to work out any imperfections within your personal trading system and will make it a bit easier to trust it.
No matter what your long-term and short-term trading goals are, you cannot realistically attain them without utilizing every possible advantage. Foreign exchange is a volatile and exciting market, and only by understanding it as thoroughly as possible will you be able to negotiate with it effectively. One of your most significant advantages when trading forex is trading with a simulator.
Use it wisely.
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