The foreign exchange market (abbreviated Forex or Fx) is an international market for trading currencies. It is the largest market in the entire world, financially. This and the fact that it is a market that literally "never sleeps" makes it a very attractive money making option.
Trading in Forex is open to anyone with a computer and an internet connection. The trick lies in actually having a solid handle on the innards of all things Forex. "How do i do this?", you might ask.
Forex Demo Account
It would be unwise to commit real funds to the Forex market before acquiring knowledge on how everything works. It is in this situation that a Forex demo account comes in extremely handy, allowing you to experience the Forex market, without running any financial risk whatsoever.
How does it work?
Before actually opening a Forex account, you must decide on a trading platform you are going to use. A platform is a piece of software, owned by a Forex broker. This software is there to help a trader with analysis of Forex trading and actual execution of a trade, through the provision of various assist mechanisms.
Many brokers will allow you to open a demo account using their software. This demo account is funded with demo money, which then allows the account's owner to participate in fictitious trade, all in the effort to make said owner familiar with the particular platform and with the Forex market.
Why would you need to open a demo account?
The first, and most obvious reason, is that is free. There is no substitute for keeping your money in your pocket. The only cost may be that the broker will take your name and email contact to try to convince you to sign on as a live account holder.
Next, a demo account will allow you to develop a trading strategy/system before jumping getting into a live market. Ever heard the phrase "failing to plan is planning to fail"? The FX market is not exempt to this golden rule. It is best to look at the full picture of a particular trade well and think about what you will do in all situations that arise i.e., develop a strategy. What better way to practice your desired strategy that in a no risk simulator.
Third, you will have the opportunity to learn your particular platform without the risk or making a mistake that might cost you money. Platform software will look intimidating to the untrained eye and will definitely require a buffer period before a new user becomes comfortable with it. Your demo account is the best place to engage in such an experiment. However, do not underestimate reading forex broker rating.
You will also learn to manage risk while on the demo account. With the proper parameters on your demo account you can learn Fx trading with conditions almost similar to the real world. Lowering your initial account balance (the default balance of around 50000 dollars is for the most part unreasonable), leverage, and number of currency pairs you trade will make your experience in the Forex demo account as close to reality as possible.