The first thing you should do if you are a beginner in forex trading is to open a forex demo account. This will give you the opportunity to learn and practice forex trading without the risk of losing money in the process. Additionally you can use a demo account to test different trading systems.
Choosing a profitable forex trading system is vital if you want to succeed in forex, so you probably have to test a variety of systems until you pick one that fits your trading style and generates profits for you. It is not too difficult to find trading systems. There are numerous available on the web, some of them are free and for some others you have to pay (most of them have a refund policy of 30 or 60 days which give you the opportunity to test them and if you don’t like the results, take your money back).
You should check your system in two different ways before you start trading with real money. The first one is backtesting. Backtesting is the process of testing a system using historical data of at least a 6-12 months period. This will give you an idea of the profits or loses you would made if you had been following the system during this period. Of course, you should know that results of the past are not a guarantee of future profits and additionally historical data do not always show the truth and are a little different from real price movements
The second and most accurate way is testing a system on real time data using a demo account. In that way, you could check and use a system under the same conditions as if you would trade with real money. The only disadvage of this testing method is that it takes some time to get a clear picture of the system’s performance. (usually a few months) You could decrease the time needed to check a system if you choose day trading or scalping systems. In both these types of systems, trades often last only a few minutes, which means that many trades will be generated each day, as a result you will have a clear picture of the system’s performance in a short time. On the other hand day trading and scalping is too risky for a beginner and even thought you could make really fast profits it is not advisable
Whatever system you decide to use, you should first test it on both real and historical data before you implement it in your forex trading strategy and be sure that it is generating consistent profits in the long-run. Fortunately, most forex brokers offer a free demo account, something that makes the whole process of testing easy and helps you improve your forex trading with zero risk.
Therefore, what are you waiting, open a free demo account today!