The demo account is a tool that allow you to trade using virtual money. This allows you to learn tot trade and how to choose the right options without having to risk any real money. The demo account is a very valuable tool. It can be the difference between success and failure as a binary options trader. A lot of new traders do not use this tool. Something that often cost them a lot of money.
Most traders initially lose money until they get skilled enough to make money. Many traders lose their entire first deposit before they learn how to become more skilled traders. This causes many traders to stop trading rather than depositing more money. This is sad because most successfully traders will tell you that they had the same original experience but that they stuck with binary options and before long they started to make money. It can take everything from a few weeks to several months to become a trader skilled enough to make money. You can avoid losing money during this period by using the demo account to trade using virtual money until you become skilled enough to make money.
A lot of trader who fail to make money on the binary options market could have been successful if they would have used the demo account that was available to them. Do not make the same mistake.
Common reasons not the use the demo account
Below we are going to look a little closer on some of the many reasons that traders use as an excuse not to toe user the demo account.
- I do not need to. I am an experienced trader: You might be an experienced trader with years of experience picking stocks, or trading on the FX market but this does not mean that you are going to be successful as a binary options trader. The skilled needed are similar but not exactly the same. When you trade with stock or the FX market then you decide when to close a position. You can wait out a sudden unexpected market movements. This is not the case with binary options. You can not effect when the position closes (at the time of maturation). You therefor need another strategy when you trade binary options then you need when you trade other financial instrument. Assume you going to do well just because you have experience trading other instruments can be an expensive mistake. Use the demo account until you have learned to adapt your strategies to binary options. This will usually not take very long tanks to your experience.
- What if I make a lot of money. I would never forgive myself for trading with virtual money: Some individuals find lost profits being just as painful as loses. This can be a beneficial trait to have but you must never allow it to control you. The likelihood that you will make money from day one is a lot smaller than the likelihood that you will initially lose money. With this in mind it is best to use the demo account. Remember that a dollar lost is worth just as much as a dollar not gained. Since the likelihood is higher that you will lose money then gain money then it is best to trade using the demo account. If/Once you become successful you can start trading for real money and at that point it will not matter if some of your initial profits where made while trading with virtual money. You will be able to earn this money back very quickly.
- The demo doesn’t work the same way as the real trade/ It is easier to make money with the demo account: This is a common misconception. The demo accounts and the real money accounts. Your chance to make money is that same regardless of which type of account you use as long as you pick the same option at the same time.
- I didn’t know that the broker offer a demo account: This is understandable but unforgivable. You need to know exactly how binary options work and which tools you have at your disposal before you start trading with binary options. Not knowing is never an excuse.
Not just for beginners
The demo account is not just for beginners. It remains a valuable tool even after you have become more experienced. The demo account a low you to develop and try out new trading strategies without losing any real money. This allows you to try all your trading ideas. If a new strategy works well you can start using it to trade for real money. If it doesn’t then you will know that and can move on to try your next idea. All without ever having to lose any of your own money.