In South Africa, forex trading is booming. Even before the pandemic, the country was the leader on the continent in terms of daily volume. Now, the trading community has grown as many residents discovered the convenience of forex during lockdowns. A demo account is the first step in a trader’s career. Here is how to use it effectively.
The currency market, or foreign exchange, is the biggest financial marketplace worldwide. Its daily turnover is a spectacular — 6+ trillion US dollars, according to Bloomberg. It is accessed by institutions like central banks and hedge funds, whose activities account for the largest share of this volume. Today, any individual may also connect to the colossal environment through a brokerage account.
The primary goal is to buy and sell different currencies at the right time. Profit is the difference between entry and exit points. All currencies are traded in pairs, and each has two prices at once — one for the seller (Bid) and one for the buyer (Ask). The logic is relatively simple: you buy low and sell high. However, this may be accomplished through very different strategies based on technical or fundamental analysis.
Advantages of a Demo
Trading is not gambling. It brings profit to those who can follow consistent strategies, manage market risks and their own emotions. Traders have a lot to learn, but this is not rocket science. A demo account is a way to build skills before stepping into the real market.
Access is provided by local and international brands. Global brokers have a competitive edge as they are often regulated by multiple international watchdog organizations: for instance, operations of ForexTime are monitored by the FCA in the United Kingdom, the CySEC in Cyprus, and the FSCA in the country. With a forex demo account, you can practice as long as necessary — there are no restrictions.
What makes demos invaluable is that you can explore all software features safely. Live trading requires real capital, so you will have to put your own money at stake. Using a demo, you may build and follow strategies, analyze charts, manage positions, etc. This psychs you up for real trades and develops the necessary acumen.
How to Create a Demo
A demo account is easy to register. Just open the broker’s official website and fill in a simple form to get your login and password. The credentials will land in your inbox almost immediately. Next, you may enter them in your trading terminal to unlock the simulator. The system will mimic real market conditions and provide you with a virtual balance, so you can learn at your own pace.
Every broker recommends a particular system or a range of platforms. For instance, clients of FXTM may choose between MetaTrader 4, MetaTrader 5, and the company’s unique app called FXTM Trader. These systems provide cross-platform functionality. A user may work from different devices during the day, as these share data instantly. Thus, you may analyze the market using your smartphone, open a position from your tablet and close it via a laptop.
The range of recommended software depends on the broker. Popular systems have everything a trader needs. Using a single app, you may analyze the market at a glance, receive news updates, manage positions, initiate withdrawals, etc.
Today, there is an app for everything, including forex. You may try different systems in the demo mode to see how they compare. Your platform may not be fully understandable from the start, but it should be fairly easy to adapt to.
Forex Educational Resources
Traders in South Africa may use free educational resources provided by brokers, dedicated websites, and even YouTube channels. Discover the most popular strategies and insights from industry professionals, and apply them to your demo activity. There is no shortage of material to help you polish foresight. Your broker will also provide guidance, as customer support is accessible 5 days a week.
Can I Trade without a Demo?
Of course, nothing prevents you from jumping into live trading headlong. However, you will likely fail and lose money. Traders need to calibrate their positions carefully. They ought to set Take Profit and Stop Loss, determine acceptable volume per trade (no more than 1% of total capital), etc.
The theory is useless without practice. If you know the basics of technical analysis, but never apply it to price charts, trading live will be disastrous. Therefore, be patient. Like any other job, trading requires preparation and the right mindset. Fortunately, there is a wealth of educational content, and it is available free of charge.