Demo-account in binary options market
If, having read brokers’ advertisements, who work in binary options market, about fast earnings, a person decides to open his account and work in this market – and there is nothing bad in it. But it is not bad for a broker of course. But speaking about a person, most probably he will lose invested money. Why is it so? Because if you do something for the first time, you are not able to do it well. Answer the question: can a person, who sat at the piano for the first time, play Strauss waltzes or Mozart sonatas? The situation with financial markets is the same.
But you shouldn’t despair, all of us are born without theory and practice, but step by step we are getting to know new things, which help us achieve success in the certain sphere. The same is with binary options. You can achieve success, but having made efforts, using theory on the practice.
The benefit of demo-accounts
The simplest and fastest way to learn the practice of binary option trading is to start trading with demo accounts. Such account, usually, differs from a real one only by the fact that you don’t trade with real money all deals are closed with virtual sum, which is given by a broker. Thanks to it, you don’t spend your own money. But you don’t have profits, if the results of trading are successful. You are learning, your money is in security.
The advantage of demo account is that trading takes place in real time and real market situation, that gives a trader a possibility to improve his skills and teat his strategies, and if it is necessary, to change something. Beside it, a trader gets invaluable experience and learns to work with terminal, studies its functions, which can help him in future trading on real account. Using this account is free, there is no term of existing of the account.
Despite the fact that demo account can help a novice, experienced trader also use this kind of account. The matter is that, such kind of account gives an opportunity to do the bravest experiment with strategies without a risk to lose money.
The harm of demo-account
Like any other thing in the world, demo-accounts have negative features, except positive ones.The main disadvantage is that, having learned the practical aspects of trading with demo-account, a trader isn’t ready to trade on real account from the psychological point of view. Demo-account can’t help in this case, it can even hinder you. The reason is that when trading is realized by virtual money, a trader hasn’t fear to lose money. The price of a mistake is minimal for him, he can just lose several zeros on “painted” account. But having lost everything, you can start again. On real account you trade with your own money, that’s why if you make a mistake, you lose it. It is like the comparison of rally race in your computer with real driving. In the game you can be the champion, but if you are driving your own real car, you won’t risk.
There are always the situations, when a novice shoed phenomenon results on demo-account, changed it to real account and quickly lost his deposit. To trade successfully on real-account, you must be able to abstract your mind from deposit and act according to trading strategies. You mustn’t panic and feel greediness, unfortunately very often novices of binary options have these feelings. That’s why, professionals don’t advise you to trade on demo-account for a long time. Let’s try to discuss when you should change demo trading to real trading with real money and how to do it right.
Change demo to real
To start trading with real money in binary option market, you must have a clear trading aim and try to achieve it. The aim must include two directions – predominance of profits over losses (6-7 profitable deals from 10 close is good result) and increase of first deposit. May be it win’t be big, but stable. Believe us, it is better earn 5-10 dollars a week, than you earn today 300, but tomorrow you will drain 500.
The most comfortable changing from demo-account to a real one will be changing to mini or macro account. But in the difference from Forex, where such accounts can be opened by any broker, binary options brokers don’t hurry to offer their clients such service. However, there are such brokers, you need to look for them. Such trading will let you risk with big not big sums, step by step increasing the sum of your lot. It is easier to increase step by step, than after demo-account start risking 1—20% of your deposit. If you always swam in the swimming pool, and then you turned out to be in the ocean, it will be difficult for you to swim there. So, increase the risk step by step.
Drawing the line
As we have discussed, demo-account has some advantages, which are in the possibility to practice in trading, study technical analysis and make your own trading system step by step. But you won’t be a real trader with demo-account, to be a real trader you must have strong psychological character and self-control, and only real trading with real money can learn you these characteristic features.