Binary Options Demo Account FAQ
Using binary options demo accounts are a great way to dip your toe into the world of binary trading. Demo accounts in general, provide new traders a chance to familiarize themselves with the mechanics of binary options trading without having to risk any money. It also allows traders a chance to test out their trading strategies. The experience gained might not be based on real money but it is still invaluable and earned without any costly blunders. To help you to understand binary options demo accounts better, we have compiled a list of frequently asked questions (FAQ) that are commonly asked by new traders.
List of Binary Brokers Providing Demo Accounts
To make life easier for our readers, we have compiled a list below of leading binary brokers who are currently offering demo account facilities.
How to Access Binary Demo Accounts
This is one of the most frequently asked questions by those who are new to binary options trading. Unlike the more established spot forex industry where demo trading accounts are provided as a norm, the binary options industry only started to gain popularity during the last five years. As such, the binary industry is comparatively less well developed than the spot forex industry.
A natural consequence of this is the lack of demo accounts among the majority of binary brokers. This is because these brokers tend to regard demo accounts as a “wasted resources” and are unwilling to invest this area. Nevertheless, there are a few binary brokers who understand the importance of demo accounts and try to emulate the standard of services as established in the spot forex industry by providing their prospective clients with demo account facilities. To help readers of this FAQ, we have compiled at the end of this FAQ a list of several leading binary brokers who are offering binary options demo account facilities to their prospective clients.
Types of Demo Accounts
While there are binary brokers who are offering demo accounts to their prospective clients, it should be noted that the types of demo accounts provided can fall into one of three categories, deposit based binary options demo account, deposit free demo account and timed demo account.
- Deposit Based Demo Account
By convention in the spot forex industry, demo accounts are provided free as a matter of course. For the binary options industry, the same cannot be said with regards to the provision of demo accounts. While technically speaking, the demo accounts provided by binary brokers are free, some of the brokers require that the person requesting for the demo account facility make an initial deposit of funds to their account. Only when the prospective client has shown genuine interest by depositing real money into their account would the broker release access to the demo account facility. Should the trader decided not to continue with the broker after trying out the demo account, he can then request for the withdrawal of the funds deposited.
- Deposit Free Demo Account
At the other end of the spectrum, there are binary brokers who are willing to provide the use of demo account facilities to prospective clients without any obligations. This group of brokers only require that the prospective traders sign up for a demo account by with a legitimate email address. While it is entirely possible to sign up for a demo account with a fake email address, it should be noted that the brokers require a valid email address because they need it to send an activation link for the demo account.
If you want to avoid giving out your real email address, then you can use a valid temporary email address for the activation link to be sent to. Although deposit free demo accounts require no deposit of funds, a possible limitation to this type of demo account is the fact that they could be timed to expired after a certain period of time.
- Timed Demo Account
Some brokers in order to conserve resources place restrictions on the length of time which a trader can use a demo account. The timeframe can range from 48 hours to a month. While this type of demo account is sufficient for most people to evaluate the trading platform, they are not particularly ideal for those traders who want to use the demo account to test out their trading strategies. This is because in order to evaluate a trading strategy effectively, one will need to test it several times.
Importance of Demo Accounts
While most people understand that demo accounts are important for testing out trading strategies without risking real money, there are also other underlying reasons why demo accounts are important. As the binary options industry operates in the over-the-counter (OTC) market, the industry is not standardized. Each broker has their own trading platforms with their own individual peculiarities.
- Simple Platform vs. Advanced Platform
Some of these peculiarities which can often show up glaringly when testing out a trading platform include the differences a basic platform and complex platform. With basic binary platforms, the focus is selection of assets and their possible returns. For more advanced binary platforms, the focus usually is on the analysis of the selected asset. Hence, with the more advanced platform, we can find some of the tools which are used for technical analysis.
- Placing Orders
This is another reason why binary traders are recommended to try out a broker’s platform with a demo account before committing real money is to familiarize themselves with the way the platform execute their trading orders. For example, some platforms only require you to enter the particulars of the trade directly into the data boxes beside the selected assets. For others, trading details needed to be entered into a separate pop up screen. Knowing beforehand how trading orders are executed will help minimize the chances of costly blunders when you start trading with real money.
- Display of Trading Transactions
Although many might not realize the importance of this, the way that your trading transactions are displayed will definitely determine the amount of work that you have to do when preparing your tax returns. Some platforms just surmised your trading transactions with only basic information while others are more detailed. Naturally, the more information that your trading summary can provide, the less confusing it will be for you when you try to submit your tax returns.
The Bottom Line
As can be seen above, demo accounts not only provide new traders with a way to familiarize themselves with the trading platform but also serve as test bed for new trading strategies. In addition, we learn that the different types of demo account available will serve different purposes and thus we have to be aware of the limitation of each type of demo account. Finally, always make sure that the demo account provided is a working tradable account and not a flash based simulation of how the trading platform works.