What is a Binary Options Demo Account?
A binary options demo account is a trading account that does not require real investment (deposit) from the trader. All trading takes place using virtual funds, but at the same time, transactions are opened in strict accordance with the market rate of the trading instrument. Such virtual trading is completely identical to the real conditions in order to try the capabilities of the terminal, as well as to test strategies without risks.
The process of trading binary options on a demo account takes place with the help of virtual capital, without obligations on the part of the broker and trader. Such trading is completely free, provided by modern brokers when registering on the official website.
What is a demo account for?
Such a binary demo account is provided for several purposes. The main reason why such a virtual account is needed is the opportunity to improve trading skills, as well as test trading strategies. Without trading experience, a trader can work on a demo account for the first time: understand the work process, open and close deals.
The ability to open trades without the risk of losing personal capital gives an understanding of the dynamics of the option price. By fully simulating the purchase of an option without risks, a demo account gives a complete picture of the trader’s work. At the same time, the beginner is completely focused on the process, he is not distracted by excessive fear and emotional noises, which usually greatly inhibit learning.
In addition, a demo account of binary options is especially valuable not only for novice market players, but also among professionals. The goal of the work of professionals is to find and develop their profitable author’s strategy, as well as testing trading systems. Analyzing such systems without risks with your capital, you can find their “weaknesses”, false signals and flaws.
By making a correction, you can increase the effectiveness several times. Such tests are absolutely free, but give a significant advantage to the trader. Having received the proven material, professionals build a trading plan, calculate a working deposit, work with money management and risks.
Negative aspects of demo accounts
Working on a demo account helps market participants test strategies and learn, However, it can be a real trap if the raider does not build trades with all responsibility and seriousness. In trading, there is the concept of “demolition syndrome”, which demonstrates the moment when trading becomes a game.
The trader ceases to take into account the risks and possible losses, relying more on luck than on strategy. Such trading has no risks, so traders make rash transactions, and having received a positive result, they switch to a real trading account. And it is at this time that they lose their real money, try to recoup. All this is reminiscent of a casino!
“Demolition syndrome” is a common concept often used in trading; This is a situation where market participants are not aware of the risks, relying on the fact that the losses are not real and this behavior then passes when trading on a real account. A trader, trading and losing money, does not realize this. It is difficult to unlearn this habit and this is one of the main traps for any trader – both beginner and experienced.
Another trap is the amount of deposit on the demo account, which the broker transfers. Most often, the minimum amount of funds on a virtual account is $ 1000, this differs from the average amount of a novice trader. Working on a demo account, a trader gets used to the high earnings that he wants to achieve on a real account. But the real account is usually smaller than the virtual one, and the trader, without realizing it, still makes high bets, which leads to an increase in risks.
Why don’t brokers like demo accounts?
Binary options brokers are different from Forex or CFD brokers. Due to the popularity and competition of brokers, demo accounts are a feature that all companies offer. The main problem is that there are 5 trading platforms, each platform works with a large number of brokers. The load on the servers is high, it requires a separate team for the technical processing of demo accounts that do not generate income for brokers.
Brokers want to make money, they are interested in finding real traders. Virtual accounts do not bring them income, often at this stage some beginners leave trading (change the platform or are disappointed in options), and this is also a significant loss.
Types of demo accounts
There are 3 types of demo accounts in binary options:
- A demo account, access to which is issued only after replenishment of the deposit, is the most popular type of account, when a trader must deposit a minimum amount in order to prove the seriousness of his intentions.
- A demo account that does not require a deposit; It is issued for a strictly specified time – this is an account opened for a specific period, during which you need to have time to test and study the terminal. After the expiration of the terms of use of the account, you must switch to the real one by making a deposit.
- A simple demo account that does not require a deposit; It allows you to independently and free of charge open a virtual account for trading and work on it as much as you like.
Minimum account or demo account?
After the trader has decided why he needs a demo account and what problems he can expect, the question arises: “Which is better – a demo account or a minimum real deposit?”. If the trader does not have any knowledge, it is better to work on a demo account to study the terminal, the trading process, select and test strategies. After a maximum of a week of such tests, it is recommended to switch to a real account in order to avoid the development of the “demolition syndrome” and work for real.
For professionals, a demo account is needed only for testing, as it has the skills to work and is able to assess risks. At the same time, it is important to remember that free education does not always bring the desired results, and you have to pay for knowledge.
Demo accounts of popular brokers
Demo account of the FinMax broker
FinMax, one of the most popular binary options brokers today, which successfully provides a full range of services to traders. To work on exchanges, the company offers a modern training program, a functional and convenient personal account with a free demo account, convenient methods of withdrawal and depositing funds, detailed reporting on transactions, a wide selection of assets, expiration from 30 seconds to six months, the ability to conduct technical analysis using indicators, the list of which the company plans to increase.
Any trader can register and work on a free FinMax virtual account, regardless of trading experience. One of the features of the demo account is that it is limited in time of use – it is 7 days (you can extend this period by writing a letter to the administration of the company). Trading on a demo account, the raider uses all the functions of the terminal (except for restrictions on the number of assets).
Work on a virtual account is identical to the capabilities of a real one: the same principle of trading and placing bets (expiration, type, quote forecast), and when buying an option, you need to deposit virtual capital, which changes its state depending on whether the transaction is successful or not. The trader does not receive real money, he works in a virtual exchange, studies the principle of operation of the platform, tests the available tools and tests his strength in predicting market dynamics.
Get acquainted with a detailed review of the FinMax broker here.
Read more about the FinMax broker demo account here.
Demo account of the broker Binomo
Binomo is one of the leading operators of brokerage services. The company has become popular due to its professionalism, high-quality technical support, and a functional terminal with advanced features. The broker’s demo account is free, provided automatically after registration on the Binomo website.
The simulator completely simulates the trading conditions in the market: real asset quotes, the process of placing a bet, all the functionality of the price chart settings (scaling, timeframes, exchange history), the capabilities of a personal account and technical analysis. It is convenient and comfortable to work here for both beginners and trading professionals. The balance of the virtual account can be replenished an unlimited number of times. Working on a demo account, a trader gets access to training materials, analytics and news reviews, trading strategies.
Such full-fledged functionality allows you not only to explore all the features of the platform for trading, but also to test your strength in real conditions. Therefore, this virtual account is included in the options training system. Working on it contributes to the growth of the investor’s professionalism.
The terminal is especially useful for professional players, offering advanced functionality, opportunities for testing trading systems and building your own strategy. By testing this account, absolutely any trader can participate in free tournaments with real winnings of money that can be withdrawn in any convenient way. So, without investing their money, the broker’s clients have the opportunity to earn real money.
Get acquainted with a detailed review of the Binomo broker here.
Read more about the demo account of the Binomo broker here.
Demo account of the broker Olympus Trade
Olympus Trade is a fairly young, but already popular binary options broker, leading in the Russian market. The company is aimed specifically at the Russian trader and provides site materials and professional technical support in Russian language.
The Olympus Trade trading terminal is one of the best in trading, it is distinguished by the provision of advanced functionality, a comfortable personal account, convenient ways to deposit and withdraw funds. The main advantage of the broker is the trading terminal, convenient and simple, understandable not only for beginners in trading, but also for professionals.
The broker’s virtual account is provided free of charge when registering on the official website of Olympus Trade. A demo account is a complete analogue of the real trading conditions on the exchange: the process of trading and preparing a bet, full-fledged functionality (settings, reporting, personal account, assets, quotes, expiration time).
The virtual $10,000 provided by the broker is enough to understand the specifics of working with the broker, as well as to test trading systems, so here you can fully trade and try to take risks. This invoice is provided indefinitely. This is especially beneficial for those traders who are already thinking about developing a profitable strategy.
Get acquainted with a detailed review of the broker Olympus Trade here.
Read more about the demo account of the broker Olympus Trade here.
Open a demo account Olympus Trade
Conclusion:
If you’ve been able to determine exactly what you need a demo account for, you can follow your plan. If you could not decide on the type of demo account, you will fall into 95% of traders who lose their deposit and leave trading without understanding its capabilities and without earning money.
Tagged with: Binary Options Academy • Binary Options Demo Account
