In this article, we will cover the best forex simulator software 2019. You will find step-by-step instructions for choosing the best simulator software, how to use the simulator for day trading, and also how to test your forex trading strategy.
Using the simulator will help you get rid of bad habits and become a better trader. Simulated forex trading can be one of the most effective ways to practice risk-free trading. Throughout this guide, you will learn how to get hands-on market experience and discover the benefits of using Forex trading simulator software.
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To determine if forex trading is for you, you need to get involved in the market and do your due diligence before committing any real money into the game. Using real-time historical data you can reduce your learning curve and quickly determine if forex trading is right for you.
Simulated forex trading presents several issues. Often, positive results on a demo account can translate into negative results in a live trading environment. This can make people question the validity of simulated trading.
However, the real reason behind this discrepancy is because of the lack of emotional involvement you get when real money is at stake.
Moving forward, you will learn what is simulated in forex trading and how you can benefit from sim trading.
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What is Simulated Forex Trading?
A Forex trading simulator is a software that allows you to test your strategy offline using historical data from the market. If you have new trading ideas, trading simulator software can help you test them. This allows you to find what works and what doesn’t, and eliminate any missing strategies.
Although you may be working with a demo account, market conditions resemble a live trading environment. You can open and close trades and change orders in the same way as you would in a live trading session.
The main advantages of using a free Forex trading simulator are as follows:
- Act as a live trading environment.
- Ability to test and test your trading strategy.
- Implement new trading ideas to see if they work.
- Trade a risk-free account with all the trading functions and features of live trading.
Using a free forex trading simulator can help you learn the ropes to succeed in trading. If you use the 10,000 hour mastery rule for your trading, you definitely need a forex sim to practice your skills.
Before you start evaluating your current trading strategy, you need to make sure you are using the right setup.
In the next section, we’ll show you what to look for when comparing the key features of the best forex trading simulator software.
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The Best Forex Trading Simulator
There are several important factors that every forex trading sim needs to be equipped with. At a minimum, it is important for your simulator to meet the following requirements:
1. Live Price Feed
It is necessary to ensure that your simulator has a real market environment that streams live price data. Without live price data, you will miss the opportunity to effectively study your trading strategy.
The live price feed mimics the spread. This means that when you run your strategy through the simulator, it will use the actual spread available in the market.
This feature is more important than anything else.
Having real-time price data will ensure that your backtested results are accurate. This helps you determine whether you can rely on the simulated historical data available in the software.
This brings us to the next important feature that sim trading software should have.
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2. Forex Trading Simulator Historical Data
Second, you need to have accurate foreign exchange data for the past few months. Not having enough historical price data to simulate the performance of your trading strategy will lead to unrealistic results.
The best online forex simulator will give you historical prices. It will also give you the ability to browse historical quote data for your chosen currency pair. Apart from final quote data, the database should also cover intraday quotes. No matter your trading style, be it day trading or chicken trading, the best forex trading simulator will be able to help.
Historical price data should be in a clear format where you get the high, low, open and close prices for the selected currency pair and the selected time frame. In some cases, you can also get tick volume information. If your trading strategy is based on volume, it is important to have access to volume data.
Let’s go ahead and see what other features your forex trading simulator should have.
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3. Flexible Virtual Money Account
In our experience, traders fail to see the importance of using virtual account balances. It is recommended to start with a balance close to the amount you want to use in your live trading. If you can only fund your live trading account with $5,000, there is no point in using a $100,000 demo balance.
This has the potential to set unrealistic expectations that will lead to bad habits when you start live trading.
In short, make sure the virtual money account you use to advance your trading strategy is the amount you will fund your trading account with. This will also allow you to implement a more realistic risk management strategy.
This way you won’t have any problems when you switch to live trading.
When you start trading with a demo account, you don’t have to invest any real money. Make sure you choose a free forex trading simulator that has minimal features and trading tools to get you started.
Getting started with the world’s most popular Forex trading platform aka MetaTrader4 might save you time in the long run.
Below you will find a step-by-step guide to using the MT4 Strategy Tester
Best Forex Trading Simulator – MT4 Strategy Tester
In this section, you will learn how to create a strategy using the MT4 Strategy Tester. For this reason, we will use the default strategy that can be found in the MT4 strategy library.
The first step is to open the Strategy Tester window by simply pressing CTRL + R or by clicking on the respective icon found in the top toolbar.
See the picture below:
Make sure you have selected the appropriate time window and settings. For the purposes of this example, we have chosen the following settings:
- Expert Advisor = Moving Average.ex4 (the name of the strategy we backtested)
- Symbol = EUR / USD (the instrument on which we run our strategy)
- Model = Each mark which is the most accurate method
- Duration = 1H (preferred timeframe to run our strategy)
- Spread = Current
We recommend playing with these settings over and over again until you find a winning setting.
Once you are done with selecting the settings, click on the Start button so that the simulation can begin. You can check the results of the backtesting strategy under the Reports tab.
In the proposed example, we can see that the default moving trading Strategy has produced a net loss of approximately – $400 during the tested period. This means that we are not yet ready to jump into direct trading.
We need to work more on our strategy and tweak the strategy parameters until you find a profitable trading strategy that you are comfortable living with.
Check out our guide How to Backtest Trading Strategies for more trading tips and tricks.
Conclusion – Forex Trading Simulator
The goal of simulated Forex trading is to filter out bad trading strategies and to optimize your trades to get greater profits from your trading system. The key to successful trading is to make the transition to live trading as soon as the simulation provides evidence that you have an advantage in the market.
Find forex trading simulators that are popular among other traders, and practice your trading strategy risk-free before you start trading in real time. Get experience first, start trading live when you develop your strategy.
Sim Trading is part of the process of becoming a profitable trader, and the perfect environment to learn Forex trading skills without losing money in the process. Also, check out our Zero to $1 Million Forex Strategy.
Thank you for reading.
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