Start Trading Binary Options with a Demo Account
What is Demo Trading?
While trading binary options, all investors need to do is predict and choose between two possibilities on the price of an asset. They are so simple that people without any in-depth knowledge about investment can also trade. Since there is a 50% chance one can win, investors without any investment knowledge can also make profits.
However, as binary options are also referred as “all or nothing” options, while there is a 50% chance an investor can win, there is also a 50% chance one can lose. When an incorrect prediction is made, an investor loses all the initial investment. If an investor loses several times in succession, it is possible that he or she will suffer a large amount of losses and it would be difficult to recover from investment losses.
In order to avoid irretrievable losses, it would be better to start trading with a demo account and get familiar with the trading steps and platforms. In the demo trading, an investor practices how to trade binary options with virtual money. Since real money is not used in the demo trading, investors will not lose their investment even if they made incorrect predictions. Therefore, by using a demo account, investors can practice trading without risking any real money.
How to Open a Demo Account?
When you open a demo account, it is most likely that you need to firstly open a real account at a trading platform and make an initial deposit. Then, you are able to apply to the broker and set up a demo account.
24option offers a free demo account for traders. In order to use the demo account, firstly you have to open a real account and make an initial deposit. You can use this demo account to practice trading before you start real trading. After you made an initial deposit, you can make a request and sign up for a free demo account.
When you practice trading with the demo account, you do not need to worry about your real money. Since you are using virtual money, the demo trading is certainly not like the real trading where you can withdraw the profit when you made a correct prediction. However, you do not need to worry about the losses if you made incorrect predictions in the demo trading. The trading platform is designed to be very easy to use. It is thus recommended that, traders, especially novice traders, open a demo account with 24option.
The above figure shows the trading platform of TradeRush. The platform is very easy to use and has been used by many traders including both experienced traders and novice traders. The procedures of opening a demo account in TradeRush are the same as that of 24option. You need to open a real account and make an initial deposit before you can practice trading with a demo account.
After you made an initial deposit, you can make a request and open a demo account with TradeRush. It is very easy to lose your investment when you are not familiar with the trading platform. Therefore, it is strongly recommended that you practice trading binary options before you start real trading.
Experienced Investors Use Demo Trading to Examine Strategies
Demo accounts are very useful not only for novice investors but also for experienced traders. A lot of experienced traders use demo accounts to examine whether their strategies are effective or not. Since demo trading is risk-free, it would be a good idea to examine your strategies by utilizing demo accounts.
However, it is important to know that demo accounts are mostly of limited use. Even if you have a demo account, it is possible that you cannot use some of the features provided by the binary options broker. If this is the case, you will then have to use other external tools, such as MetaTrader, to analyze the market trends.
For those features which cannot be used in a demo trading, they will become available when you carry out a real trading after you deposit to the real account.
It is necessary to remember that demo accounts are not only used by novice traders to practice trading, but also utilized by experienced traders to examine their strategies.
Demo Trading with a High Level of Awareness
In the demo trading, virtual money is used to trade binary options. Even if you do not make a correct prediction in a demo trading, you will not lose your real money. In order to better understand demo trading and be prepared for the real trading, please take a look at the following advantages and disadvantages of demo account.
The demo trading, in which virtual money is used, is at no risk and no reward. Although an investor trades binary options under real market conditions, it is still very different from the perspective of feelings. Therefore, it is essential for you to be aware of the money when you trade with a demo account. In addition, you should remember that demo trading is carried out in preparation for the real trading. It is thus important for you to be cautious in trading, even if you are using a demo account. Instead of trading with a large amount of money at a time, you should place a trade with a fair amount of money.
To Receive or Not To Receive Bonuses
If you would like to trade with a real account after practicing trading with a demo account, you can receive bonuses. However, if you just want to use the demo account for practice, you should not receive the bonus. This bonus is usually given to you when you make an initial deposit. Most binary options brokers require investors to make an initial deposit when they open a demo account. If you receive bonuses after you make the deposit, you cannot withdraw your funds easily as bonuses come with conditions.
Since bonus comes with terms and conditions, if you receive bonuses, you cannot withdraw your funds unless you have placed several trades. Therefore, in order to withdraw your funds at ease, it is important that you do not receive bonuses.
If you do not want to receive bonus, you can tell the broker that you reject the bonus when you make a deposit. There are some brokers who require investors to place several trades before they can withdraw their funds. It is thus very necessary for you to take a look at the terms & conditions and withdrawal rules.