Trading platforms are among the most useful technological innovations of the modern times for traders. Meanwhile, demo trading is one of the best ways to prepare a trader for the real fight. Here are some key insights to remember about these two.
Platforms are not created equal
Several platforms are commonly offered by many brokers. Typical platforms usually include MetaTrader4 and 5, also called MT4 and MT5. In addition to these platforms most brokers offer other platforms, although these additional choices may be proprietary to the broker. This means that the platforms may not be available with other brokers Media Platform.
While each platform may function and look a bit different, most of them offer roughly the same features. These features include forex quotes/prices, charts, technical analysis tools, news feeds, trade history, drawing tools, and functionality for buying and selling currencies.
Some platforms have more features than others. For instance, some platforms sport integrated fundamental and economic analysis tools, while others do not. For a trader who is taking long term trades, this may be important. However, a short term trader could probably do without it Forex Brokers.
It’s a good idea to place at least 50 demo trades on each platform before trading actual money. This is for you to master the specifics of order entry on each platform. You should never trade live unless you can confidently answer these questions:
- How do you place a limit order?
- How do you set a stop order?
- Can you set a limit and a stop at the entry time?
- Does the platform have fixed or variable spread? And what’s the common spread?
- What lot size can you trade?
- Can you mix and match lot sizes?
- Can you call the dealing room directly if your internet connection suddenly goes down?
Some platforms use pop-up order windows, while other let you trade by clicking the prices directly on the chart.
One function that most new forex traders overlook is tax reporting. Because forex is a global, unregulated market, dealers most usually do not provide any documentation to the tax authorities in the trader’s country of residence.
Tax reporting is solely your responsibility as a trader. Brokers simply produce detailed transaction histories, in the economic format, from which the trader must then compile their own tax reports. Such a setup obviously calls for a trading platform with a highly organized and flexible reporting function.
However, reporting quality usually varies greatly from dealer to dealer. All dealers will offer you with a full transaction report, but the way those transactions are laid out could mean the difference between spending hours of reconciling trades, or taking one minute to print out a final report to present to your accountant.
Some forex traders may generate thousands of trades in a year. A platform that reconciles all those trades into an easy-to-understand, end-of-year income statement, breaking down all profits and expenses, is invaluable.
Trade as if It’s Real
Once you have learned by heart the basic functionality of a trading platform, you can use the trading platform to experiment with various trading strategies.
On the other hand, demo trading is not the real thing, even if it helps prepare you for the real one. You may be perfectly calm after sustaining a major loss in a demo account, but you might become completely cracked out over even a small loss when it comes to your real account.
You need to trade in the demo account as if the money in there is real. A demo account should basically reflect you real situation as much as possible.