Trading on the financial market opens new horizons. It improves your life by giving you an opportunity to increase your income and improve your financial situation significantly. However, Rome wasn’t built in a day: learning how to trade well is a sophisticated process that requires knowledge and practice. With a vast selection of instruments to choose from, many people go for binary options.
In this article, you will learn about a binary options demo account. In a nutshell, you will understand what it is and how it can help you develop the necessary skills and knowledge. Moreover, you will find a list of free and trustworthy platforms that you can start your journey with.
What Is a Demo Account?
Whether you are just starting out or are experienced, a demo account is a good way to practice before depositing real money. Basically, it resembles a real account, where you use all your wit and knowledge to gain money.
A demo account is usually a free tool, where a trader purchases binary options with virtual money. It is nearly identical to the real one. Even the prices and the payouts reflect the state of the real market. Thus, it’s good practice to work out successful strategies, try your knowledge and detect loopholes, and test the selected platform.
However, one should keep in mind that there are no real payouts. A platform gives a trader a certain amount of virtual money to use. Profits are a sign of properly worked-out tactics and that you have a deep understanding of the financial product.
Although demo accounts are a means of attracting more traders to a platform, some of them come with certain restrictions. They aren’t significant, but good to keep in mind:
- An account with a time restriction. A trader can only use an account like this for a limited period of time. This time limit can vary from several hours to several days.
- An account with an obligatory deposit. A user gains access to the demo version only after depositing some money. This is a way to ensure that only traders with serious intentions and real money use the platform. Usually, the money can be withdrawn.
Some brokers don’t set any limitations. They provide free full access completely for free. A user simply registers and start exploring a galaxy full of binary options.
How Can You Open a Demo Account?
Demo accounts are usually free of charge. To open one, most platforms only require you to sign up. You can do this via email or Facebook. Usually, there are no additional settings that you need to deal with. Once you have been authorized on the platform, it’s automatically in a demo regime.
What Can You Learn by Simulating Binary Options Trading?
Demo accounts are more than just a mere simulation of binary options trading. The fact that they completely replicate the real trading process with all its details allows you to gain hands-on experience. Here is what you can learn via a demo account:
- The specifics of binary options trading. Whether you have never dealt with financial products or have tried out completely different ones (like stocks), demo accounts allow you to understand how binary options trading works.
- How to use trading tools. This includes analysis of market data and the news feed, as well as how to interpret and utilise charts. To use charts, you must know how to test technical indicators and identify patterns for data-based decisions.
- General actions on the platform. Even tech-savvy investors may lose money because they fail to understand a complex layout or perform basic activities. You can open and close positions, apply stops and limits, and so on in a demo version. Alongside this, you can learn how to track profit and loss or view margin requirements.
Together with incredible opportunities for practice and gaining experience, trading with virtual resources allows a user to learn from their own mistakes. Even experienced investors use such platforms to try out new tactics.
What Makes a Demo Account Different from a Real One?
Although binary options brokers strive to make demo accounts as similar to real ones as possible, there are still some differences. One of the most common issues is that users gain higher profits compared to trading in real life. There can be several reasons for this:
- A high starting investment – Typically, a trader chooses as much virtual money as they want. This usually exceeds the real resources they can muster. The trick here is that under such circumstances, small losses are easy to recoup. Another point is one of the most basic principles of investment: the more you invest, the more you gain.
- Market violations – Live trading implies considering dividend and interest adjustment, out-of-hours price movements, and price deviations between the submission and execution of an order, which can lead to even to rejection. Demo accounts may fail to include all the details.
- Excessive list of trading tools – Charts, access to market data, etc. facilitates analyzing the overall financial market, and making decisions. As demo accounts aim to attract customers, all the tools are usually for free. However, when you go live, some may come at an additional price.
All in all, brokers do their best to make you enjoy the demo version and deposit funds on a real account. Therefore, they aim to provide you with the best experience possible. This implies easier mechanics, fewer details (which may increase your profits), and unlimited resources that may not exist when you go live.
Binary Trading Demo Accounts as a Starting Point for Traders
It would be such a pity to miss out on an opportunity to test a platform and your skills to see whether you are ready for live trading or not. Here are some tips on how to maximize what you get out of the demo:
- Explore the platform. Check out all the features and tools to understand whether it matches your expectations or not.
- Check out a mobile version. Trading can become a long term activity that requires constant accessibility. It’s hard to use if the mobile app doesn’t suit you.
- Assess your optimal budget. Reap the opportunity of unlimited resources to work out the correct amount of funds to trade
- Make mistakes. Sometimes you have to do this intentionally to learn how to deal with tricky situations with minimal loss. This is a good experience.
- Look for educational tools. Some brokers offer them. You can learn the theory and practice it immediately. If it works well, try implementing it in live trading.
The Best Free Platforms to Use
Not all platforms provide access to a binary options demo account. Some brokers – among those who do have demo accounts – have terms of usage that are not favourable (like strict time limits, or requiring a deposit).
Instead of surfing the internet in search of a reliable and convenient free demo for binary options trading, check out five best platforms:
Binary options trading requires specialised knowledge and experience. Options brokers give access to a demo account that lets users explore the market and the platform. For an investor, it’s a unique opportunity to practice and test strategies. All in all, the greatest advantage of options demo trading is its similarity to live trading. Therefore, with a reliable platform, a user can open up a world of binary options free of charge and with minimal risk.