FOREX Tester – Using a FOREX Simulator

Just because you’re new to Forex, doesn’t mean that you have to dive into a live market without any idea of what you’re doing in order to gain experience. Demo trading is one way, but it’s difficult to get the full Forex experience from a demo account. They work differently than live accounts do. But there is a type of software out there that can help. It’s called a Forex tester.

WHAT IS A FOREX TESTER?

A Forex tester, also known as a Forex simulator, takes historical data that you input into it and let’s you trade on that data like you would trade on the live Forex market. You buy, sell, set Stop Losses, use indicators, all of the things you do when you actually trade Forex live. Do it right, and it functions as the best kind of trainer out there – one that teaches you to trade, to develop a strategy, and to get comfortable using that strategy before you have to risk any of your actual money.

WHY IS IT BETTER THAN A DEMO ACCOUNT?

Think about it – you can take a decade’s worth of historical data and trade on it as if you were right there trading while it happened. You’ll learn how to recognize patterns in the market, as well as learn when to ignore what looks like a pattern before it tricks you into losing all of your deposit. Compared to a demo account, it’s like playing spring training in the major leagues compared to playing a baseball video game – the games don’t count for real, but you’re still going up against major league pitching. It’s an amazing way for you to hone your skills before you’re ready to play for keeps.

BESIDES HISTORICAL DATA, WHAT ELSE CAN I DO?

As well as being able to trade on historical data, with a Forex tester you’re also going to get a chance to use real indicators. Learn how to use Moving Averages, oscillators, and momentum indicators to make sense of the Forex market and how to find opportunities to profit. You’ll also be able to try trading different currencies. US dollars, Euros, gold, silver, money from around the world – you’ll be able to test your strategy with all of them.

WHAT ARE THE ADVANTAGES TO USING A FOREX SIMULATOR?

A Forex tester simulates the actual feel of trading. You find out what’s coming as the data runs through the program. Since you don’t know what’s coming you can make decisions based solely on the data itself, the way you would on the live market. You won’t be tainted by foreknowledge of what’s to come, so you won’t be biased when you trade. Another advantage is time management. You can speed up the chart, slow down the chart, or stop it all together. You can test out your strategy over the course of days, weeks or months in a very short amount of time. With demo trading you’re only able to test your strategy in real time as prices change on the market. Think about how much better it would be to test your strategy over the course of an entire year – all in just a couple of days. Because of this, you’ll never have to wait again to see if your strategy is a winner. And you won’t have to wait weeks or months to see where it can be improved. You come up with it, you test it, you improve it or you discard it with the full knowledge of how it works on real Forex data for however long a time period you want to check.

CAN A FOREX SIMULATOR BE USED WITH A TRADING ROBOT?

It sure can! Just like when you’re testing a manual trading strategy, you can use automated trading software with a Forex tester to test how effective your trading robot is. And again, with the time control you’ll have, you won’t have to wait months to see how your robot does over the long term. This is great if you’re shopping for a Forex robot, because most have guarantee periods where you can get your money back, so you can test the robot with a Forex simulator before you even spend a penny on it.

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