Binary options has certainly become among the most popular trades around the world.
However, it is a fact that goes without mentioning that binary options trading comes with its own share of challenges, hence the need to study it and first understand all that goes on in this trade before venturing into it.
This is the reason why a new trader will always have the opportunity to open a binary options demo account to get a chance to practice how they will handle the real account. There are many advantages of the demo account. For example, you will get all the necessary tips that you need for the real account which will make it possible for you to make a lot of money when you get down to real trading. Reading alone about the binary options without enough practice will not be good enough; you will still need to actualize what you read.
How does a binary options demo account work?
When you open a demo account online, you will have the opportunity to trade all types of trades just like you would in the real account. The only difference between the two is that for the demo account, you will not make any deposit, you use virtual money. The losses that you make too will not be real, but you still get a feel of how the real account works.
Here you will also be able to trade on all types of assets be it commodities, currencies, stocks or indices. The demo credits provided are refilled for you once you use them all. Anyone who wants to seriously venture into the binary options trade market should open a demo account, no doubt about that.
How to set up a binary options demo account
This is a rather easy task to do. You will only need to visit the site of the broker that you are going to use and then click on the “open demo account” button. You will be required to fill in some details and the account will be opened immediately.
After filling in the details, it will take about a minute before you’re sent a username and a password which you will use to login to the demo account. There is a main menu that will allow you to get access to the different markets as well as being able to navigate through the trading platforms.
Once you find a trade that you want to participate in, press the call or out button depending on whether you think the value of the asset will go up or down. Then select the number of credits you want to wager on the option and then press okay which will automatically lace your trade.
You can keep track of all the current and previous trades by pressing the history button which will show the whole history of all the trades that you carried out. Here, you will also be able to see all the profits and the losses that you have made in the past trades.
Once you feel that you are competent enough to start the real trading, then you can switch to the real money version account, make a deposit and you trading and making money. The first deposit will attract some bonus depending on the broker that you are dealing with and, as such, be sure to claim it.
Advantages of using a binary options demo account
- There are several benefits that you get from using the demo account. You will be able to use the account to practice how to trade different assets and on different platforms. Therefore, by the time you are done with it, you will be able to comfortably handle the real account.
- There are some trading platforms that are quite complex to use. As a result, the demo account helps you to get ready for such an eventuality since you will be able to see what you are expecting and how to handle the various challenges that you face. Moreover, you will be able to know which platforms are good for you so that when you go for the real account, you know what exactly you want.
- The demo account allows you to make errors for the first time and then learn how to avoid them in the future. It would be really expensive if you were to trade real money without having learnt how to evade the errors.
- Once you have had experience on how to trade binary options, you will be able to switch to the real account with ease. Moreover, you will be able to gain bonuses on the money that you deposit for the first time.
Differences between a binary options demo account and a real account
There are quite some differences between the demo account and the real account. Below are some differences between the two:
- There is fear while trading in a live account unlike when trading in a demo account. It is important to remember that the demo account experience can be just like that of the live account, but in most cases, this is not achieved. That is probably for the reason that the trader knows that they will not lose any money in their trades.
- In the demo account, chances of getting the price that you want are very high. The stop losses and the entries end at the value that you have specified. This is not always the case in a live account.
- In a demo account, you get the position size that you ask for. This will not always be possible in a live market.
It is important that you treat a demo account like a real account. The way you handle the demo account will determine how well you will be able to handle the real account too. You need to feel the fear, stick to the plan, account for slippage and partial falls. Doing everything right will make the transition to the live account much easier.