Most professional occupations require practice in order to hone their skills and strategies, and forex traders are no exception. However, how can traders possibly hone their forex trading skills?
Indifferent from other professions, forex traders also need to regularly practice in order to polish their skills and strategy to mastery. After all, practice makes perfect.
Speaking of forex traders and their way to train, it is rather tricky and complicated. Unlike sports or arts in which you can freely practice at any time and any place, forex unfortunately does not work that way, at least to some extent.
However, that does not translate as an impossibility. Forex traders can still hone their skills and strategies outside the real-time markets. In other words, they do not have to necessarily risk their capital all the time in order to learn the best way to trade.
Forex traders can hone their trading skills through several ways. Among them, here we are presenting exemplary ones.
Also Read: The Reasons Why Forex Traders Lose Money
Demo Account
The closest simulation to replicate trading in a real-time market is trading using a demo account. Prior to entering the real stuff, traders can try-out their strategies there and assess whether their skills are adequate.
Demo account allows you to trade via a real forex trading platform on a simulated market environment. Though the simulation might not always be accurate, it gives you enough insights on how your strategies will perform in a market.
Back Testing
Back-testing is a way to reexamine the effectiveness of certain trading strategies based on historical data. By back testing, you can assess whether you strategies provide merits and how much they generate.
Accordingly, the longer you use certain strategies the more accurate the result. There, however, some considerations upon back-testing such as slippage, commission fee, and the success probability in the future.
Paper Trading
Paper trading, as the name suggests, is literally practicing to trade on a paper using a pen. Accordingly, it is not much different from using a demo account.
Sometimes, paper trading puts unrealistic trades and does not acknowledge bad trades. On the other hand, paper trading usually simulates a market condition with high profitability.
