Before talking about trading simulators or specifically the Forex simulator, we need to learn a little about trading.
What Is Trading?
Trading is the purchase and sale of listed assets (shares, currencies, and futures) with significant market liquidity. It is a regulated electronic market, and it is increasingly accessible, since it is only necessary to hire “brokers” that provide the technological platform to carry out operations.
In short, trading is the buying and selling of listed assets for profit.
Where are these assets? They are located in regulated financial markets that you can access electronically from your home.
How much do these financial products cost? The prices change depending on supply and demand.
The goal of trading is to take advantage of these movements (price movements), which will not only help you make money and put your savings to good use, but also teach you how to read charts and identify market cycles.
Now that we know what trading is, let’s start talking about stock trading simulators and the Forex simulator.
What Is a Stock Trading Forex Simulator?
A Forex simulator is a computer platform that accurately simulates the environment and conditions of the stock market. These simulators offer features very similar to demo accounts on trading platforms and offer traders up to 100,000 euros of virtual capital.
The stock simulator is one of the best tools to gain experience with stocks without risking your money. They provide an opportunity to review the strategies used and learn from mistakes.
These platforms have great value because they allow you to trade the most common assets, such as commodities, bonds, stocks, or contracts for difference (CFDs). Many of them also allow you to invest in different markets such as the United States, Europe, or Asia.
You can find free stock market simulators on the Internet that you can download in minutes. Although analyzing their properties is convenient, some cost very little and offer several advantages that allow the operator to gain very useful knowledge.
The most recommended are those that include tools such as technical analysis, which can show the historical evolution of the price of an asset and help traders anticipate the changes they may experience at the moment. Knowing how to interpret these signals, traders can profit from the real action.
For a trading simulator to work, traders must have the same attitude as when trading real money. It is important that you trade with the same passion as the market, and develop strategies that you would normally use. Otherwise, it’s just a hobby.
What Are the Advantages of a Stock Trading Forex Simulator?
A forex trading simulator is a very interesting training tool because it allows you to trade real securities under real market conditions. In fact, the results obtained with such simulators are exactly the same as when trading with a real account.
Using a trading simulator will allow you to understand the various mechanisms that affect the price of an asset on the stock market, as well as familiarize yourself with the various features that you’ll find in classic trading platforms, such as reverse orders or analytical tools.
The main advantage of a stock simulator remains that there is no risk and no loss, and of course, the profit is not real.
Here are the top ten benefits of using a trading simulator:
- You gain experience and it prepares you to operate in the future.
- You improve your trading psychology.
- Don’t lose money.
- Explore different types of financial markets.
- Learn about how the operation works in trading.
- Use and practice technical analysis.
- It allows you to develop a trading strategy.
- You have access to the real market without risk.
- You can practice the movements you want.
- Learn to study the behavior of financial assets.
How Does It Work?
Using a stock trading Forex simulator is exactly the same as using a real trading account, such as an account offered by a CFD broker. The only difference is that in this case the invested funds are virtual.
In fact, you are investing in the actual price of the selected asset and it has the same tools and features as real money trading. The positions are in real-time and fundamental, and the chart analysis data is real data used by real traders. This way, you will be able to test multiple strategies until you are sure that you have the best control over your investment in the stock market.
Remember, the purpose of using a trading simulator is to improve your trading without fear of failure. It is a tool that allows you to make as many mistakes as you need to learn from each one. Therefore, when practicing with a simulator, you must be very analytical and critical, as you must understand what caused the result in order to implement solutions or changes more effectively.
A great way to keep track of all your actions is to use a trading log, where you can write down every action you take during your trades, the results, and even consider the emotional aspects of your trading session.
Thanks to the control and registration of purchases and sales made in the trading simulator, you will have the opportunity to follow the development of your activity. You will also be able to identify your strengths and weaknesses in order to address and focus on them. After all, it is a very useful tool if you are just starting out or if you are a professional trader who wants to test some ideas or new strategies.
What Is the Difference Between a Real Trading Account and a Stock Trading Simulator?
The main difference between a trading simulator and a live trading account on an online platform is, of course, money. In fact, using the simulator you can start trading without depositing any money.
However, some simulators offer contests that sometimes allow you to win small amounts of money or prizes.
Also, some stock trading simulators do not bundle all of the brokers’ features or offer additional features, especially when it comes to learning.
Summary Of the Qualities of a Stock Trading Forex Simulator
- Most stock simulators are free.
- It also allows you to improve your knowledge and control of the markets by testing new strategies without taking risks.
- It allows investors to train and learn to organize and place orders online.
- The stock simulator is a good way to test your level before you start trading with real capital.
- A simulator also allows you to determine the assets that are easiest to trade, as well as the most profitable.
- It allows you to create a balanced portfolio with effective hedging strategies.
- A stock trading simulator is an excellent way to have fun without taking risks.
Why Is It Important to Practice with a Simulator?
From a training perspective, using a trading simulator is important. On the one hand, it is important to acquire theoretical knowledge about investing in the stock market and financial markets. But it is equally important to be able to test this knowledge in practice without risking capital, and determine if the strategy is right for you. That’s why trading simulators exist.
What Is the Difference Between a Forex Simulator and Other Trading Simulators?
In a Forex simulator, you can use historical data of the last 16 years, a very large period of time in which you can temporarily position yourself where you want and move forward or backward, see the chart generated frame to frame, and even adjust the speed of those frames to go forward or backward according to your needs.
In this way, you maximize the opportunity to enter the market to test your strategy, and you can start trading (setting all the parameters as if you were working in real time). In a Forex simulator you also have a virtual balance (you can choose to top up early or top up later) which is affected by the results of your actions, and you can move forward in time to see the results of your actions ahead of time. In this way, it becomes clear that strategy optimization is much more possible with the help of a Forex simulator, and you can do in minutes what would take days, weeks, or even months on a demo account.
You can find more information and tips on how to use a trading simulator on our site MecanicaDiesel.