About Demo Accounts

Trading is a serious business that should be certainly be approached with realistic expectations. If you have ambitions simply to make an exceptional amount of profit through trade, whether through forex or binary, then this is not for you. Much like life, trading the financial markets comes with highs and lows. If you aren’t prepared to lose, then you aren’t ready for this industry. Those that succeed best are traders who have equipped themselves with the tools, experience, knowledge and strategies to see themselves through the lowest points.

One of the best ways to prepare for the live markets, is by taking advantage of a demo environment. Almost all brokers offer demo accounts to their clients, either before or after a deposit. The best demo accounts are unlimited; available for use for an uncapped amount of time, with virtual funds to match.

Why is a Demo Account Important?

After selecting a broker, it is highly advised to acquire a demo account first, or, where possible, to run a demo alongside a live trading account. Irrespective market experience thus far this virtual space will be of great benefit, allowing new traders feel familiar with the features on trading platforms, but also enabling seasoned traders to test developing strategies. A live account can then be used to place actual trades if you feel confident to do so. In fact, it is quite common for even advanced traders to conduct their trials in the safety of their demo, before issuing live trades directly on the platform, or via apps on a mobile device.

Paper trading (trades made through a demo) in itself is a great testing tool for your personal abilities. It gives you the room to mould trading decisions into a strategy and after a period of time, analyse the results.

For example, let’s assume that you are trading divergences based on an oscillator and every time the market is forming a bullish divergence, you want to buy a specific amount with a specific risk and target, and in a bearish divergence you want to sell. Paper trading this strategy for two or three months will give you an in-depth view of its potential profitability, real-time conditions, money management, etc, allowing you to draw a solid conclusion.

However, when compared with forex trading, binary option platforms offer less charting capabilities; they are simpler, and focus on trade rather than deep technical analysis. Binary options demos therefore, can only provide a trader with experience of general navigation, platform tools and features – offering less insight into market direction than forex platforms are able to do.

Further benefits to using a demo accounts come through familiarising yourself with your broker – spreads, execution, honest server times, upgrades and correct information regarding the release of important events, etc. After all, a relationship with your broker should be paramount and trust should be built over time.

Lastly, always remember that ‘risk free’ trades only truly exist within the confines of a virtual environment. Any broker offering tools to enable risk-free trading is merely facilitating improved statistics, and never a guaranteed solution.

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