Hooray, free money! While there is nothing like free money in this world, there are many ways to earn some easy money. Forex brokers are always running promotions and contests to attract and retain customers and you can take advantage of this. While most of these contests require some deposit, others are deposit-free and open to anyone with an interest in trading. However, these contests are highly competitive, so to win you need to stay focused and have a winning strategy.
Here are some top 10 tips that will assist you win any forex demo contest you enter into.
1. Pick a Reliable Broker
Forex brokers are many out there. With the market having liquidity levels of over 4 trillion USD daily, it is a very attractive investment opportunity for all kinds of brokers. Needless to say, that means a lot of quacks have opened online brokerages to try and cash in. Apart from quacks, there are cons that are openly out to defraud you. Learn to pick the genuine and the reliable out of the crowd. Some reliable brokers who frequently run demo contests include Alpari, InstaForex, Grand Capital, AGEA, and RoboForex among many others.
2. User Friendly Platforms
If you want to trade, you better find a way to make your operations easy. Choose a trading platform that is easy to use. When picking a trading platform, keep in mind the kinds of gadgets you will be using. Ask yourself questions like, “will I be trading mostly on the go or within my office/home?” and “will I be trading during the day or at night”. Such questions will help you determine whether you will mostly be using a PC, tablet, or smartphone to make your trades and which is the best platform for your chosen device. Additionally, if you will be using a shared device you might prefer a web-based platform rather than an application-based trading platform.
3. Check Terms and Conditions
Demo contests usually have varying terms and conditions. Does your broker allow you to cash in your winnings? How long will the competition run? How are the winners determined? Who qualifies to participate in the contest? Which countries are barred from participation? You need to make sure you understand all the associated terms and conditions to avoid disappointments and disqualification.
4. Perform Due Diligence
While we have already mentioned that picking a broker is necessary to avoid quacks and cons, you can never be too careful. While checking terms and conditions help, there is more you can do to ensure your interests are safeguarded. For instance, you should always check that your broker is regulated by a reliable authority. You should also confirm that the competition, promotion, or contest is overseen and protected by a reliable, third-party oversight authority. Ensure that the contest conforms to all legal requirements.
5. Start With the Education Package
Now that you have confirmed that you are within the law, you must be ready to make a killing. Before you register for the contest, check whether the broker provides an education package. Surf the net and check your local library for easy to understand guides on how the forex market works. Learn how to trade forex and how to use your chosen platform.
6. Manage Your Margins
Just like live accounts, demo accounts come with magnificent margin levels that will enable you leverage your deposits and bonuses to earn much more money than you invested. For instance, you can start with a $500 bonus supplied by the forex broker to earn as much as $10,000 or more in a single trade. Nevertheless, you need to be very careful when using margins and leverage. This is because as much as it enables you to increase your earnings, it also multiplies your losses in the same way. So it is very possible to clean out your whole account even in a single trade.
7. Trade like It’s Real Money
When trading on a bonus, you might feel you can afford to be reckless since it is not your own money. You might even view it as not real money. That is the wrong approach to take. First, a demo bonus is very real money. Depending on the contest rules, this is real cash that you can either cash in or re-invest into your live trading account for future further profits. Secondly, having such a reckless attitude will never prepare you for investment in your live account. Remember, the demo contests are mainly to benefit new traders by training them to profit from live accounts.
8. Trend the Market
As a new trader, the temptation is always to buy at the lowest price point (trough) and sell at the highest price point (peak). While experts can do this comfortably, it’s a lot more challenging for newcomers to find these price points. Thus, the best strategy to take is to trend the market. Enter a trade after the price reversal and sell before reaching the peak price. It is better to be safe than sorry but do not trade on fear either. Ensure that your stop loss is wide enough to give time for a reversal and that your take profit levels are high enough to provide a reasonable income.
9. Pick Your Trading Hours
You are not a machine. You cannot trade all hours of the day just because the forex market is open 24 hours a day. You need to take breaks away from the market and away from your price charts in order to stay focused. Additionally, you have to have a winning strategy in order to win a demo contest. Therefore, the best way to trade would be to pick trading hours when the market offers the highest liquidity for your chosen currency pair. For instance, if you are trading USDJPY, pick a time when both the New York and Tokyo markets are open for trade or when the US and Asian markets are at the highest liquidity.
10. Re-Invest Your Wins
The fastest way to grow your portfolio is to re-invest your profits and grow your capital. This works just as well when trading in a demo contest. Do not simply rely on your trade bonus. Everything you earn should be ploughed back. By using the same margins as before, you can leverage your profits to exponentially grow your income and win the contest prize.
Forex brokers are in great competition to sign up well-performing new traders to enhance their portfolios. For this reason, they will entice you with bonuses and contests offering lucrative prizes. Take advantage of these contests and promotions to launch your trading career and get the best out of the forex market. These 10 tips will make all the difference on whether you will squander your bonuses and deposit or emerge a winner with a million-dollar trading account.