A forex demo account is a very crucial tool for assessing a broker’s platform, testing your fundamental and technical analysis skills and lots more. Using a demo account is highly recommended.
Yet it doesn’t fully prepare you for the real thing. Here are 4 downsides for demo accounts, and solutions for part of them.
Demo trading doesn’t include execution problems: Even the best brokers with a strong reputation and many liquidity providers cannot avoid a failed execution of your orders. This is reality, especially in extremely volatile market conditions. Execution in demo accounts doesn’t fully mimic real accounts. Unfortunately there’s no solution for this issue, and this doesn’t mean you should skip demo trading. Just be aware of this.
Amount: The amount of money that you’ll see in your demo account will usually be much larger than you’ll deposit. This will make every loss you encounter in the demo account as less meaningful and may enhance the feeling of “monopoly money”. So, you’ll be less prepared for the real thing. In addition, you”ll get used to big position sizes, and wehn you’ll reach the real thing, a few losing trades could burn your real money. Solution: Ask the broker to adjust the amount of demo money to the number you really think of depositing.
Broker may add demo money: This practice isn’t too common, but you should still be aware of it and refuse to accept it. Refilling the account when it’s close to depletion may help you continue practicing and will also prepare you for more real deposits in the future, something the broker always wants you to do. But on the other hand, it may also give you the false feeling that it’s just another computer game when you can always click “New Game” and also hinder your performance with a real trade. Solution: Ask the broker to “withdraw” the demo money from your account.
Once you’re in, you’re in: If you test only one broker’s account, you’ll most likely proceed with depositing real money. Why? Because you’re already familiar with the platform and the salesperson encourages you to dip into the real waters. The goal of demo trading for you and for the broker is that you’ll get familiar and open a real account. So that’s good. But wait: being familiar with one broker doesn’t mean it is the best one for you. For the sake of comparison, at least test one more broker. The second test will likely be faster.
I would like to repeat that demo accounts are still of high importance and that also seasoned forex traders should test a new broker with a demo account before making a deposit. It’s just that like anything else in life, a simulation cannot fully prepare you for the real thing.
What do you think? Are there any other pitfalls that you can think of?
Showing posts with label forex tips for beginners. Show all posts
Showing posts with label forex tips for beginners. Show all posts
Thursday, November 3, 2011
Saturday, October 22, 2011
Forex Most Important Events of the Week – October 24-28
The US dollar fell for another week as the panic seen early in the money continues to unwind. Will this weakness come to an end? The EU economic summit, rate decisions in Canada, Japan and New Zealand and US housing and employment figures are the major events this week. Here is an outlook on the main market-movers awaiting us.
Last week The Philly Fed Manufacturing Index scored +8.7 points unlike predictions for a negative reading of-9, a good sign of recovery after the serious 30.7 drop in September. Nevertheless, all eyes are turned to Europe and the EU Summit this Sunday and a follow up later on.
Important decisions are about to take place concerning the huge debt crisis affecting worldwide financial markets. Options are becoming limited.
Let’s Start
EU Economic Summit: Sunday. The leaders of the Euro-zone will try to reach an agreement about the usage of the EFSF bailout fund, recapitalization of the banks and the size of the Greek haircut. Negotiations are stuck and a second summit on Wednesday has a better chance of reaching an agreement on something.
Canadian rate decision: Tuesday, 14:00. The BOC decided to maintain rates at 1.25% for the seventh time however hinted strongly about a possible rate hike in the next rate decision meeting. The bank also announced that monetary stimulus will be stopped in case the growth continues in order to achieve a 2.0% inflation rate. No change is forecasted.
US CB Consumer Confidence: Tuesday, 14:00. The Conference Board Consumer Confidence Index increased in September, less than predicted, to 45.4 from45.2 in August while a rise to 46.2 was predicted. Consumers are worried about current conditions which weakens consumer spending. A rise to 46.3 is predicted.
US Core Durable Goods Orders: Wednesday, 12:30. U.S. companies’ orders of durable goods, excluding transportation products, dropped by 0.1% in August contrary to predictions of 0.1% gain. This important spending indicator reflects the weakness in theUS economy. An increase of 0.6% is predicted now.
US New Home Sales: Wednesday, 14:00.US new home sales dropped by 2.3% in August in line with predictions reaching 295,000 units after302,000 in the previous month. New home prices are still considerably higher than existing home prices taking into account the foreclosure deals tempting the US home buyer. This situation is expected to weigh on future new home sales. A rise to 303,000 units is expected now.
NZ rate decision, Wednesday, 20:00.New Zealand’s central bank decided to keep rates at 2.50% in light of increasing global economic risks despite a positive recovery process in NZ domestic economy fearing tough conditions abroad will jeopardize exports. Rate are expected to be maintained at 2.50%.
Japanese rate decision: Thursday. The Bank of Japan maintained its overnight call rate between 0 to 0.1% by a unanimous vote and continues its monetary easing to achieve price stability. No change in rates is forecasted.
US Advance GDP: Thursday, 12:30. The earliest indicator of US economic growth showed a 1.3% climb in the second quarter of 2011 from 0.4% expansion in the previous quarter. This reading was somewhat below the 1.7% increase predicted. This rise is credited to the increase in exports and foreign investments. A growth of 2.3% is expected now.
US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits dropped last week to 403,000 indicating improvement in the job market conditions following409,000 in the preceding week. Nevertheless economists predicted claims will drop to401,000. A small rise to 405,000 is predicted.
US Pending Home Sales: Thursday, 14:00. Pending sales of existing U.S.homes dropped 1.2% in August due to Hurricane Irene, stopping sales in the Northeast. Before the Hurricane, economists predicted 1.8% rise. An increase of 0.2% is expected now.
*All times are GMT. That’s it for the major events this week. Stay tuned for coverage on specific currencies.
The scenario of an orderly yet non-elegant Greek default in the first week of November is getting closer and becoming more real.
If you are interested in an alternative way of trading currencies, check out the weekly binary options setups, including EUR/USD, GBP/JPY and more.
Last week The Philly Fed Manufacturing Index scored +8.7 points unlike predictions for a negative reading of-9, a good sign of recovery after the serious 30.7 drop in September. Nevertheless, all eyes are turned to Europe and the EU Summit this Sunday and a follow up later on.
Important decisions are about to take place concerning the huge debt crisis affecting worldwide financial markets. Options are becoming limited.
Let’s Start
EU Economic Summit: Sunday. The leaders of the Euro-zone will try to reach an agreement about the usage of the EFSF bailout fund, recapitalization of the banks and the size of the Greek haircut. Negotiations are stuck and a second summit on Wednesday has a better chance of reaching an agreement on something.
Canadian rate decision: Tuesday, 14:00. The BOC decided to maintain rates at 1.25% for the seventh time however hinted strongly about a possible rate hike in the next rate decision meeting. The bank also announced that monetary stimulus will be stopped in case the growth continues in order to achieve a 2.0% inflation rate. No change is forecasted.
US CB Consumer Confidence: Tuesday, 14:00. The Conference Board Consumer Confidence Index increased in September, less than predicted, to 45.4 from45.2 in August while a rise to 46.2 was predicted. Consumers are worried about current conditions which weakens consumer spending. A rise to 46.3 is predicted.
US Core Durable Goods Orders: Wednesday, 12:30. U.S. companies’ orders of durable goods, excluding transportation products, dropped by 0.1% in August contrary to predictions of 0.1% gain. This important spending indicator reflects the weakness in theUS economy. An increase of 0.6% is predicted now.
US New Home Sales: Wednesday, 14:00.US new home sales dropped by 2.3% in August in line with predictions reaching 295,000 units after302,000 in the previous month. New home prices are still considerably higher than existing home prices taking into account the foreclosure deals tempting the US home buyer. This situation is expected to weigh on future new home sales. A rise to 303,000 units is expected now.
NZ rate decision, Wednesday, 20:00.New Zealand’s central bank decided to keep rates at 2.50% in light of increasing global economic risks despite a positive recovery process in NZ domestic economy fearing tough conditions abroad will jeopardize exports. Rate are expected to be maintained at 2.50%.
Japanese rate decision: Thursday. The Bank of Japan maintained its overnight call rate between 0 to 0.1% by a unanimous vote and continues its monetary easing to achieve price stability. No change in rates is forecasted.
US Advance GDP: Thursday, 12:30. The earliest indicator of US economic growth showed a 1.3% climb in the second quarter of 2011 from 0.4% expansion in the previous quarter. This reading was somewhat below the 1.7% increase predicted. This rise is credited to the increase in exports and foreign investments. A growth of 2.3% is expected now.
US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits dropped last week to 403,000 indicating improvement in the job market conditions following409,000 in the preceding week. Nevertheless economists predicted claims will drop to401,000. A small rise to 405,000 is predicted.
US Pending Home Sales: Thursday, 14:00. Pending sales of existing U.S.homes dropped 1.2% in August due to Hurricane Irene, stopping sales in the Northeast. Before the Hurricane, economists predicted 1.8% rise. An increase of 0.2% is expected now.
*All times are GMT. That’s it for the major events this week. Stay tuned for coverage on specific currencies.
The scenario of an orderly yet non-elegant Greek default in the first week of November is getting closer and becoming more real.
If you are interested in an alternative way of trading currencies, check out the weekly binary options setups, including EUR/USD, GBP/JPY and more.
Friday, October 21, 2011
EUR/USD Oct. 21 – Stays in Channel as Summit Headlines Remain Confusing
Euro dollar continues to trade choppily in a smaller range within the channel. Discussions about the crisis strategy aren’t fruitful yet, and the leaders are still scrambling to get something done, perhaps for a second summit afterwards. The calendar is relatively light, but will some news about a comprehensive solution break before the week ends?
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
Asian Quiet trading under the 1.38 line..
Current range: 1.3725 to 1.38.
Further levels in both directions: Below 1.3725, 1.3650, 1.3550, 1.35, 1.34, 1.3360, 1.3285.
Above: 1.38, 1.3838, 1.39, 1.3950, 1.4030, 1.4160, 1.4282.
Note the downtrend channel which accompanies the pair. It’s getting narrower.
1.3650 is an important cushion for the current range and its role strengthened.
1.38 is only a minor line before 1.3838, which is also becoming weaker.
Euro/Dollar trades in channel - click on the graph to enlarge.
EUR/USD Fundamentals
8:00 German Ifo Business Climate. Exp. 106.3. Actual 106.4. No big surprises here, but still a deterioration.
17:00 US FOMC member Narayana Kocherlakota talks.
17:20 US FOMC member Richard Fisher talks.
19:00 US FOMC member Janet Yellen talks.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
EFSF Scrambling: The leaders of Germany and France are trying to come up with something towards the summit on Sunday, October 23rd, before the bigger G-20 summit which begins on November 3rd. According to denied reports, there is a significant gap. One of the ideas on the table is to postpone the summit or have a second one on Wednesday, October 26th. They know that time is running out before the G-20 summit, when The Plan of a Greek default at the beginning of November is set to happen. Currently the long list of confusing reports just adds to the choppiness.
Greek parliament approves austerity again: A two-day general strike, and massive protests of which some turned violent didn’t stop the parliament from approving more austerity. Also in Greece, a report that 200 billion euros had fled the country adds pressure on the banking system, which has a shortage in cash and is exposed to Greek sovereign debt.
France’s rating in danger: After Moody’s slashed Spain’s credit rating to A1, more than expected and Slovakia was downgraded, S&P talks about downgrading France as aid to its leveraged banks looms over Europe’s second largest country.
Trouble in Portugal: Spain’s neighbor has a significant hole in its budget which it is now trying to fix. This sounds too familiar to Greece.
US Situation Improving: The huge leap in the Philly Fed Index was great news, but with the current focus on the debt crisis, it was ignored. This joined the excellent retail sales report from the US convinced many that the US will avoid recession, at least in Q3. QE3 is away from the table, and we’ll probably hear more about that from the 3 Fed officials that will speak late in the day.
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
Asian Quiet trading under the 1.38 line..
Current range: 1.3725 to 1.38.
Further levels in both directions: Below 1.3725, 1.3650, 1.3550, 1.35, 1.34, 1.3360, 1.3285.
Above: 1.38, 1.3838, 1.39, 1.3950, 1.4030, 1.4160, 1.4282.
Note the downtrend channel which accompanies the pair. It’s getting narrower.
1.3650 is an important cushion for the current range and its role strengthened.
1.38 is only a minor line before 1.3838, which is also becoming weaker.
Euro/Dollar trades in channel - click on the graph to enlarge.
EUR/USD Fundamentals
8:00 German Ifo Business Climate. Exp. 106.3. Actual 106.4. No big surprises here, but still a deterioration.
17:00 US FOMC member Narayana Kocherlakota talks.
17:20 US FOMC member Richard Fisher talks.
19:00 US FOMC member Janet Yellen talks.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
EFSF Scrambling: The leaders of Germany and France are trying to come up with something towards the summit on Sunday, October 23rd, before the bigger G-20 summit which begins on November 3rd. According to denied reports, there is a significant gap. One of the ideas on the table is to postpone the summit or have a second one on Wednesday, October 26th. They know that time is running out before the G-20 summit, when The Plan of a Greek default at the beginning of November is set to happen. Currently the long list of confusing reports just adds to the choppiness.
Greek parliament approves austerity again: A two-day general strike, and massive protests of which some turned violent didn’t stop the parliament from approving more austerity. Also in Greece, a report that 200 billion euros had fled the country adds pressure on the banking system, which has a shortage in cash and is exposed to Greek sovereign debt.
France’s rating in danger: After Moody’s slashed Spain’s credit rating to A1, more than expected and Slovakia was downgraded, S&P talks about downgrading France as aid to its leveraged banks looms over Europe’s second largest country.
Trouble in Portugal: Spain’s neighbor has a significant hole in its budget which it is now trying to fix. This sounds too familiar to Greece.
US Situation Improving: The huge leap in the Philly Fed Index was great news, but with the current focus on the debt crisis, it was ignored. This joined the excellent retail sales report from the US convinced many that the US will avoid recession, at least in Q3. QE3 is away from the table, and we’ll probably hear more about that from the 3 Fed officials that will speak late in the day.
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