In the world of trading many fortunes have been made; and unfortunately, many fortunes have also been lost. A binary options demo account gives binary options traders a chance to test their strategies without the risk of live trading. The objective of trading is to profit from your endeavours – rather than be impoverished by them. As with all activities that one seeks to master, it takes research, and practice to achieve trading success.A binary option demo account gives traders an opportunity to evaluate their investment strategies before risking real capital. Bank of Trade is dedicated to educating new and seasoned traders on the finer points of binary options, and demo accounts are the key to building your trading strategies and your confidence as a trader.Online trading was first introduced in the mid- to late- 90’s, with the advent of affordable online connections, and high-speed computers. Online trading involves placing buy/sell orders in a commodity or financial asset market, via online brokerage websites. Binary option trading is a fairly new form of online option trading that has become popular amongst new and seasoned traders alike.
What are Demo Accounts?
Also referred to as a binary options practice account, a binary options trading demo account is recommended for all new traders. Contrary to what many believe, it is possible to establish a free options demo account, and you do not have to pay to practice with a free binary options trading demo account.While there are some binary options brokers that only allow demo trading for account holders that have deposited funds into a live accounts, this is not the case will all brokers. To best understand what a binary trading demo account is, we must first explain the live account and its features.Live TradingLive trading involves the investment of actual capital into a particular financial asset using an online brokerage website. Binary option trading with live accounts does involve risk; but unlike other forms of trading, the risk is predetermined, and can be minimized by investing smaller amounts. The profits and losses with live trading accounts are real, unlike the losses and profits seen with binary option demo accounts.Demo TradingAlso called “paper trading,” demo trading involves zero financial risk for the trader. Opening a free binary options demo account is a way for traders to experiment with trading strategies and devise a trading system to use during live trading sessions. The demo trader researches assets and executes trades just as he would during in a live trading scenario.
Binary Options Demo Trading vs. Live Trading
Some people feel that demo trading is not an effective way to begin trading, because they feel it does not paint a fully realistic picture of what goes on when you are trading with a live account—and your real money is at stake. However, starting out as a novice and investing your capital, without knowing if your strategy is effective, is not the wisest decision for a new binary options trader.A practice binary options trading account gives investors a much needed platform to gain experience and get a feel for trading binary options. Although the execution of binary options is based merely on determining whether an asset will go up or down, the risk involved is just as real as with any other form of trading. This risk factor is what makes binary option demo trading a good idea.Just as with playing a sport or musical instrument, practice is essential when starting out as a new trader. When attempting to achieve great feats and accomplish goals, the confidence to succeed comes about by practicing. It is common to spend weeks and months looking to master a skill enough to compete for a main event. The countless hours spent are all for the purpose of good execution for what seems like only moments. Just as the musician and athlete need ample practice to perform at their optimum level, the new trader needs practice to develop the skills needed to succeed. A binary options trading practice account offers this platform to test your trading strategies.Trading PsychologyThe major difference between binary options demo accounts and live accounts lies in the psychology of the trader with nothing at risk, versus that of the trader risking capital. This psychological rift is the reason why some falsely advise new traders to not start with options practice accounts. Even though the feeling of trading with demo accounts is not identical to the feeling of live trading, it is best to start without the risk to gain familiarity with the process. With that being said, keep in mind that being successful with demo trading does not guarantee you will be successful with live trading.—it does increase your likelihood of success.A trader may have traded successfully on a demo account, and feel confident enough to begin live trading. He proceeds to make his deposit into a live trading account to initiate live trading. Once the deposit is made, a change in confidence often takes place. The fear factor is the psychological aspect of live trading that does not exist with demo trading. When there is no real money at stake, the fear of losing your investment is not present. The feeling of fear associated with losing real capital cannot be simulated using binary options demo accounts, but remain mindful of the impending, live trading fear factor while you are in the demo trading phase.Fear can often cause hesitation, and lack of confidence in the trading system or strategies that were practiced. This fear-based trading usually results in early losses when switching from binary option trading demo accounts to live accounts.The other factor, that is not present in demo trading, but is experienced by live traders is greed. Greed arises when a trader begins to win or lose successive live trades. A trader suffering losses may decide to chase losses by doubling the investment amount—resulting in an even greater loss of capital. Accumulation of successful trades may also embolden a new trader to deviate from the original plan and increase the amount of the investment—also resulting in greater loss. Greed clouds the judgment, and is the enemy of live traders. While greed cannot be simulated with a practice options trading account, remain mindful of the greed factor when trading with your demo account.
How do Demo Accounts Work?
Binary options demo accounts allow traders to gain experience in a risk-free environment. The mechanics of a demo account are typically identical to that of the live account. The platforms used in both types of trading usually look the same, and the functionsavigation features are usually the same.Once the account is created, the trader is able to monitor the assets offered by the broker, and decide what assets look favorable for trading. When the trader has decided on the asset to trade, the order can usually be placed with the click of a button. Once the order is placed, the platform will allow you to monitor your trade. After the trade period has expired, the trader is notified whether the trade was a profitable one, or a loss. A record is normally kept within the trading platform to show the details of each trade executed with the practice binary options trading account.
How to Get a Binary Options Demo Account
The process of registering for a free binary option demo account is fairly straight forward. The specifics of registration will differ from broker to broker, but the basics are pretty much consistent amongst all binary options brokers. Here we will give you an overview of what is usually needed when opening a binary option trading demo account.Very little information is needed when opening a demo account with a binary options broker. In some cases the registration will take just one minute for a new client to register. Registration is done using a registration form on the website of the chosen broker. The form contains fields for all of the information required to open a demo account. This information requested is usually your:
- First Name
- Last Name
- Phone Number
After the form is submitted, you will need to confirm the registration by responding to the verification email sent to the email address you provided when registering. Once you have confirmed the registration via your email confirmation, your registration is complete.
Where Can I Get a Binary Options Demo Account?
Although Bank of Trade is not partial to any particular binary options broker, as an authority on binary options, we feel it is an obligation to provide detailed information for our readers. It is in the spirit of this commitment that we are providing the following list of binary options brokers that will give you a binary options demo account free:The above list is accurate at the time of this writing, and is subject to change at any time. Please view the FAQ section of the selected broker to see the updated details for that particular company.
Test Your Strategies before You Trade
For the novice trader, and the seasoned trader alike, the concept of testing strategies is vital when looking to experiment with zero risk. Before you practice binary options trading, it is important to thoroughly research the various trading analysis types (Fundamental, Technical, and Sentimental), and decide what skills you need from each form of analysis to build a strong system.It is helpful to learn how to read candlestick charts, and how to use some basic chart indicators to assist you with trend spotting, and determining the best times to buy/sell. You may also want to review financial calendars before executing trades to see if there are any potential political or industrial announcements scheduled that will adversely affect your trades. Continue to experiment with different approaches, making sure to keep track of strategies used, and the results of those strategies. When you are able to see measured success with a particular strategy for weeks/months, you can assume that the technique is sound enough for live execution.
Making the Transition from Demo to Live Trading
The transition from using a free binary option demo account to using a live account can be very difficult for some traders. It is important to know when enough demo trading is enough. You do not want to jump into live trading before you are ready, and you do not want to use demo trading like a crutch—not wanting to let go. You must begin by entering into demo trading with the end result in mind.When opening the demo account do not use an excessive amount of money. If you are not going to use $25,000 to start with, a $25,000 demo account will not offer you a realistic demo trading experience. A demo account starting with about $1,000 to start out with will offer a much more realistic experience for the novice trader. If you have an account with an unrealistic balance, it will give you the feeling of having an unlimited supply of capital, and this feeling is not helpful when preparing to transition to live trading. You need to attempt to make the demo experience as close to the live trading experience as possible.Make sure every trade done using a free binary options demo account is executed just as you would if you were trading with real capital. Do not enter into any trades without serious consideration about the odds of success as opposed to failure of the trade. Try to imagine what it would feel like if you were actually investing your own capital into the trade. This will help condition your psyche for the transition from demo trading to live trading.As we mentioned earlier, the emotional aspect of trading live is not possible to duplicate with demo trading, and even imagining that you are investing real capital is no comparison to actually gaining/losing real money. The fear and greed-induced excitement are simply not present with demo trading.Show No EmotionWhen using a free binary options demo account, negative emotions like fear and greed are non-existent. Telling a trader to show no emotion when actual money is at stake is easier said than done. However, if a trader is strict, and focuses on the system without wavering, the emotional factor will not matter. If you have thoroughly tested your system, you have no reason to fear, and if you follow the rules of smart investing (only invest 5% of your account balance per trade); you will find that you are able to make a smooth transition from demo trading to live trading.Knowing when to go LiveThere is no set time that a trader is supposed to trade using a demo account. Knowing when to transition from a binary trading demo to a live account is solely dependent on the trader. Some traders are aggressive, some are conservative, and others fit in the middle. It is safe to say, no matter what the style of trader you happen to be, that is you are able to trade with consistent success for no less than two and no more than four months, then you are ready to transition to live trading.When you begin live trading, the best approach is to trade using the absolute minimum amount possible (even if it is less than 5% of your account balance), to lessen the emotional factor involved with the switch to live trading. After you become comfortable with the switch to live trading, and learn to become emotionally detached from the trading process, you can begin trading using 5% of your account balance for every trade, and refusing to alter the investment amount or the strategy practiced during demo trading.
Just as soldiers undergo extended periods of combat training before being released into real-life combat scenarios, a trader should spend ample time preparing before engaging in live trading. This is done because the preparation time is detrimental to the process of success. While trading is not a life-or-death situation – like military combat, the importance of training before trading cannot be stressed enough. Make sure that you are comfortable with your trading strategy before you proceed to live trading.