Practice is the key to success. What applies to any skill also applies to binary options: Without binary options demo practice, you might waste a lot of money and fail to create a successful, long-lasting trading career. Why take that risk?
With a binary options demo, you can put yourself on the way to success without taking any unnecessary risks. A demo allows you to practice your skills in a risk-free environment before switching to real money trading.
There is no better tool to practice binary options than a demo account.
Why do I need binary options demo practice?
We know, you can’t wait to get started. Binary options are an exciting trading style, and the promise of making money and getting rich is attractive. Nonetheless, you should avoid letting this promise tricking you into acting hastily.
Every time you invest money, getting rich is not the only possible outcome – you could also lose your money. In fact, for someone to make money by trading any asset, someone else has to lose money. To make sure that you come get the better side of this deal, you need practice.
There are five things you need to practice:
- The mental aspect of binary options,
- Your trading strategy,
- Your money management system,
- Your broker’s trading platform,
- Your daily trading routine.
As a newcomer to trading, you understand none of these things. Trying to learn them while you invest real money is a bad idea that will inevitably lead to rookie mistakes and losses of money that could have been avoided easily.
With a demo, you can take your first steps with binary options in a risk-free environment, saving you money and allowing you to enter real-money trading when you are ready.
Where can I practice these things?
While a demo account is the best way of practicing binary options, it is not the only way. In the old days, before internet trading, many traders used a technique called paper trading.
These traders defined their trading strategy and analyzed the market as if they were trading with real money. Instead of buying and selling assets, however, these traders noted their trading decisions on paper.
Every time they would have bought an asset according to their strategy, these traders noted the exact time of the decision, the price they would have bought the asset for, and the amount of money they would have invested in the deal.
Now they kept monitoring the market. As soon as their strategy would have dictated them to sell the asset, they noted the price and the profit or loss they would have made on the deal. Over a period of months, this approach helped them evaluate whether their strategy works.
Some binary options trader have adapted this approach to binary options trading, keeping track of the trades they would have made on paper, trying to figure out whether they would have made or lost money.
While paper trading can help you evaluate your strategy, it requires a big investment on your part. You have to take precise notes and keep track of everything as it happens – the smallest mistake and your test is worthless. With the short timescales of binary options, this is difficult. The market creates a new price for an asset every second, and it is often difficult to judge which price would have been the opening price and which price would have been the closing price of your option, always leaving too much room for ambiguity.
Binary options demo practice can do the exact thing for you as paper trading, but has a number of advantages:
- It’s more precise: You always know exactly which deal you would have made because you actually made the deal.
- You can monitor your success more easily: To know whether you made or lost money, all you need to do is take a look at your account balance.
- You can’t renegotiate in hindsight: With paper trading, you can always say that you might have done slightly differently, allowing you to see your results in more positively than they are. With a demo, your results are crystal clear.
- You learn your trading platform: Paper trading can’t help you to familiarize yourself with your broker’s trading platform, your demo account can.