Kindergarten

Binary options demo | a great tool to develop own strategy

Binary options demo

One does not just simply start trading live without having the slightest idea how a particular market functions. As I had some strategies in my trading arsenal from Forex I wanted to see how I can apply those in options. My demo account came as a great help for me because, although I had some market experience, I was completely new to Binary Options so I needed a place where I could practice a bit before risking real money.

Using this platform, I found out that it is much easier to open and close trades with options than it is with currencies. I did not need to worry about where to place my stop loss orders or take profit orders. The price simply had to be higher at the time of expiry of option when you bought a call and lower if you bought a put.

You have to learn the theory, then you have to trade virtual money in a Demo account and only then you can trade for real. One thing is certain: the Demo account is not a rumor but is shrouded in a lot of uncertainty and today we will try to lift the fog, giving you the truth behind Demo accounts. Binary options demo is a great tool to develop own Binary Option trading strategy

What is Demo account

According to Investopedia, A trading account that allows an investor to review and test the features of a trading platform before funding the account or placing trades. A demo account is typically “funded” with simulated money, which allows the investor to conduct fictitious trades in order to become familiar with the ins and outs of the platform.

What is a Binary Options Demo Account

When talking about demo accounts, most people are referring to virtual cash accounts. Virtual cash accounts are basically the trading of real assets with real expiry times, but with “virtual” or “demo” money. In other words, you cannot lose your real money, but you can practice and get familiar with the Binary Options platform and with the process of placing trades.

Some brokers claim to have a demo but it’s often just a movie clip or some other kind of brief demonstration on how to trade Binary Options, not an account that you use to practice trading. When I come across a brokerage that claims to have a demo, but all they have is a 5 minute movie clip, I usually start looking for another broker. I don’t think it’s fair to mislead clients like that. What you will most often find is a chance to play the market for a few minutes or few days, until the broker cuts off your access and asks you to make a deposit.

How Binary options demo account works

A virtual account is set up by the broker at the moment the trader asks for it, usually not before. Brokers don’t just hand them out. Each broker will provide you with a different sum of virtual cash. Another important issue is the expiry periods of demo accounts – some brokers will offer you a free demo account, but only for one day, or one week tops. So if you intend to open such an account, make sure you know a little about trading beforehand, because you will want to put in some virtual trades before the broker closes your virtual account. Like I said, it’s usually an offer within a specific time limit. So make sure you make the best of it and you place as many trades as you can while your demo account is still active.

A number of brokers offer demo accounts right on the platform without the need for registration or deposits but there are still catches. There are two types of these free demo accounts. One that doesn’t require a sign up and offers direct access to the demo – this one has the drawback of not getting the trading history saved. The second type is one that requires a registration so that it can be converted to a live account later on. Once you have created a name and a password you can sign in and start trading right away. Something both of these have in common are limits and restrictions on trading such as; limited cash balance, blocked assets and some trading tools being unavailable.

Learn How to Trade with Binary options demo Account

Simply follow the four steps to place a trade in your demo account:

Step 1: Choose the trading asset. First, you have to choose your preferred trading asset. You have hundreds of different options at your disposal, such as stocks, currencies, commodities and indices.

Step 2: Choose the direction. Next, you need to select a direction. If you believe that the price will increase, select “call,” but if you believe it will decrease, select “put.”

Step 3: Choose the desired investment amount. You need to choose the amount you wish to invest. This can be anything from a few dollars to tens of thousands of dollars.

Step 4: Choose the expiration time. Select the time when you want your investment to expire. This can be anything between 30 seconds and several months.

Believe it as Real Account!

A practice account helps you to go through the same processes and actions that you will go through when making a real trade and prepares you for the possible outcomes. If you find range trading more appealing than trend trading you will have to find out what method to use trading a range and go through the process on a demo account a dozen or even hundreds of times. The point is that you don’t just place random trades and try to see how good you are. No, this is gambling and we do not want to do it. You select a method or a strategy and go over it as many times as you can in order to get better at that specific method.

Before choosing your trading strategy in terms of time frame (hourly, daily, three day, weekly and etc.) or in terms of market conditions (range, trend, choppy-sideways) you need to try to practice each one on a demo to see which one fits your style best. If you want to build a good system you will have to know exact rules for when you trade calls or puts. Then you would place those on a demo as if you were doing it on a real account. By the time you make a trade on a real account you will have practiced your strategy dozens of times. You will have experience and you will have necessary technical skills to carry out a trade. But one thing you must NEVER do: don’t play with the Demo account. Don’t ever think: “Ah, it’s just a demo, it doesn’t matter if I blow it.” Don’t throw money around (even if it’s Demo).

Sure, demo money won’t buy you cars or houses but consider it a tool to help you get that stuff on your own, not a toy. If you trade recklessly and grow the initial $20,000 into $100,000, that doesn’t mean you will be able to replicate the feat on a real account because once your own money is on the line – guess what – you’ll start to worry. “What if I lose this trade? What if I lose the next one as well…? OMG if I lose the third also, I’m going crazy”. Try to care for your Demo account as much as you would for your real account. Now, I know that’s not entirely possible, but try, because you want your demo trading to replicate as much as possible real live conditions, you want to prepare for real trading where you risk real money.

Live account trading is not easy!

Real trading is certainly not easy, but it does not mean you cannot cope with the above mentioned things. You won’t become a good trader trading exclusively on a demo account in the same way as you won’t become a great boxer by simply doing shadow boxing. You will only be able to acquire skills with demo trading. To gain the sharpness of a pro you will have to start placing real trades on a real account, making mistakes, learning from them, correcting them and improving your trading style under real trading conditions. Some traders say that being around one month on a demo is more than enough, others say you need at least 6 months, others advise you should double your Demo account three times before moving to Real. Different people, different opinions; I say use it as much as you need but don’t be afraid to make the switch. Whenever one has practiced his favorite methods enough times he will surely have to make a switch from demo to real. Once you believe you are ready to do that, head over to open a live account!

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Binary Option Kindergarten

All Lessons in Part 3: Prepare Yourself for Trading

Lesson 1: Binary options demo
Lesson 2: Binary Option Trading beginner’s tips
Lesson 3: Trading options for a living
Lessom 4: Binary Option Trading Career

 

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David Richard

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