Simulated Forex Trading Can Save You A Fortune

We are all familiar with such things as flight simulators used to train airline pilots, but did you know that there are also such things as forex simulators?Forex simulators, which operate very much like many PC games which start out by giving you a scenario and then setting you a target, allow you not simply to practice trading in a safe environment without risking any money, but also allow you to 'rewind' your trading and analyze just what you got right and what you got wrong. They also allow you to practice trading in your own time and at your own pace and can pack weeks of conventional training into just a few days.Here are just some of the benefits of using a forex simulation package:Learning currency relationships. Many traders have no problem understanding the workings of a single currency but find it difficult to get used to working with a currency pair. A simulator however teaches and reinforces the relationship on one currency to another and the impact that one currency can have on another.Understanding market conditions. An understanding of the forex market and, more importantly, a knowledge of how to use the market to your own advantage is critical to success. Simulation updates traders on economic conditions and news which can affect the market and shows, often quite dramatically, how economic events can move trading currencies. This is a powerful lesson to learn because it is fundamental to gauging when to enter and when to exit the market.Differentiating between short-term and long-term trading. By allowing you to work with short-term and long-term trades, simulation clearly demonstrates that there are significant differences between to two and that forex traders often choose to trade in one or the other, but not both.Understanding the advantages and dangers of caution. All too many traders, and especially novice traders, are too cautious when trading and simulation allows you to throw caution to the wind and experiment with setting stop losses less tightly than you would otherwise do in live trading.Identifying trading preferences. Simulation can allow you to trade independently or with the help of a broker and, in so doing, decide whether you prefer to involve a broker in your trading decisions or to make your own trading decision, based upon your own knowledge and advice sought from a variety of different reputable sources.Identifying and setting trading strategies. On of the most important things for any forex trader is to set himself a trading strategy and then stick to it. However, establishing the right trading strategy can be difficult and traders are often tempted to switch strategies believing that an alternative just might be more profitable. With simulated trading you have the opportunity to test out as many different strategies as you wish quickly and in a safe environment and to select the best strategy before you enter the world of live trading.The world of forex trading is both exciting and profitable but it can also be very dangerous if you do not know exactly what you are doing. The first step for any novice trader must therefore be to learn everything he can about the currency trading world and then get in some serious practice before beginning live trading.