Practice FOREX Trading

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Practice FOREX Trading

Before you can trade FOREX on a live account, you need to develop your own trading system or adopt an existing one, and then test it on historical FOREX data. If your system successfully works on history, and on a FOREX demo account, you can try it on your live account.

There are 2 traditional approaches to testing a FOREX system and to practice FOREX trading. The first common one is a demo account. You open an account with a FOREX broker, and trade in exactly the same way as if you did it on a live account. This approach has a big advantage… The result will be exactly the same as with the real account with only one exception… You win or lose imaginary money, which is good.

The problem with testing a strategy on a demo account is in timing. In order to thoroughly test a strategy on a demo account, months or even years are required unless you test a scalping strategy that can be thoroughly tested for a couple of weeks. I’ve seen people testing their strategies for years without hitting the real world.

This is the reason why smart traders invented faster ways of strategy back testing. You can practice FOREX trading without a demo account. All you need is FOREX chart print-outs and a pen, or a FOREX charting software. To test a strategy, you just find the first point on the chart where you would enter the market according to your strategy, and write the price down on a piece of paper along with position type (SELL or BUY). Then you scroll the chart, find an exit point, and write the FOREX exit price down.

Then you find the next entry point, write down the price and position type, find the next exit point, and write down the second exit price. Then you repeat this all over again until you scroll through the entire chart, and you will end up with a list of price pairs and position types (SELL 1.5667,1.5600; BUY 1.5610, 1.5720; … and so on). Finally, you calculate profit taking spread into consideration. If spread is 3 pips for the currency pair you are trading, you can reduce profit of every trade by 3 pips.

As you probably noticed, this approach is not quite technologically advanced, and may involve a number of errors that may render a losing strategy profitable and vice versa. It also does not allow you to practice FOREX trading in a rapid way. This is the reason why I do not use it anymore. I use a specialized FOREX strategy back-testing software instead.

For instance, Trading Strategy Tester for FOREX software lets you simulate a demo account using historical FOREX data with one important difference… In Strategy Tester, you can fast-forward the chart right after you open a position to quickly move to the exit point within seconds to find out the trade outcome right away without waiting hours or days. Then you can fast-forward the chart to the point where you would open another position, open it and fast-forward again. If you do a mistake, you can roll your chart back to cancel the trade and return to the entry point. If you do not fast-forward, the bars appear in real time as if it was a real live account, where the last bar is breathing.

Trading Strategy Tester for FOREX has everything you need to back-test your strategies and practice FOREX trading in real time. It calculates profit and loss automatically taking defined spread into consideration. It has every indicator known to traders, and lets you test your strategies on multiple currency pairs simultaneously.

If you are interested in Trading Strategy Tester for FOREX, you can download it by clicking on the Download button below this post.

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