A forex demo account is a practicing tool. If understanding the language of forex seems as hard as deciphering hieroglyphs, the forex demo account is your Rosetta stone. In order to understand all the basic terms, strategies, and methods that can be used in forex trading, all that you should do is setting up a basic demo account…and there you go. You have the power to teach yourself everything with no risk and minimal effort.
Actually…it’s maybe not as simple as that because the fact that there’s no risk means that the benefit that you can derive from using the demo is limited as well. The funniest way to characterize the market is to state that it’s risk-free, and as such, trying to learn trading in a riskless environment may do harm than benefit. Demo trading can be useful but that use can easily turn to misuse if you attach too much value and meaning to demo trading results. To learn forex trading with a demo account is like you trying to learn flying with a simulator, with no real flying experience.
A mini account is the best way of practice trading because a trader still has to deal with risk while using it, however small it may be. In that sense, it is not wrong to call the forex demo as the kindergarten of trading. The knowledge that you gather is useful, but it is of limited value, and limited use in real life. So if you need to know how to use an indicator, or to learn the different ways of creating strategy a forex demo is the tool that will help you.
Ready for the intermediary level? If so, the next step is: Introduction to Technical Analysis