#CommunityAMA Forward-testing in forex trading, also called paper trading or live simulation, is a method used to evaluate a trading strategy in real-time market conditions without risking real money. It is the next step after backtesting and helps traders see how their strategy performs under current market conditions. Here's how it works: 1.Setting Up a Demo Account A trader opens a demo trading account with a broker to simulate real trading conditions. The account is funded with virtual money to test the strategy risk-free. 2.Implementing the Trading Strategy The trader follows the strategy's rules for entry, exit, stop-loss, and take-profit. Trades are executed in real-time using live market data. 3.Monitoring Market Conditions Unlike backtesting, forward-testing accounts for slippage, spreads, and real-time execution speed. Traders observe how the strategy reacts to different market conditions, such as volatility and news events. 4.Recording Trade Data All trades are logged, including entry and exit points, reasons for trades, and results. Performance metrics such as win rate, drawdown, and profit factor are analyzed. 5.Adjusting the Strategy (If Needed) If the strategy underperforms, adjustments are made to improve its effectiveness. Common modifications include tweaking indicators, risk management rules, or trade timing. 6.Transitioning to a Live Account If the strategy proves profitable in forward-testing, traders may transition to live trading with real capital. Some start with small real-money trades before fully committing. Forward-testing helps traders identify potential weaknesses in their strategies that backtesting might not reveal, ensuring better readiness for live trading. Would you like a step-by-step guide to setting up