One of the best ways to get ahead with your trading is to use a demo trading account. You can do this with both binary options brokers and Forex brokers and it gives you a huge advantage with either. Basically, the broker will create a separate account for you, one that uses all of the same software, gives you access to all the same assets, but doesn’t use real money. In this way, you can trade just as you would in real time, but with zero risk. It’s a learning experience, and since trading in general depends so much upon your level of expertise and familiarity with what you’re doing, this gives you a free and easy way to improve your trading.
Benefits of a Demo Account
Demo trading has other benefits besides giving you experience, although this still cannot be underestimated. Demo accounts are typically not open for eternity, but rather a limited amount of time, so the experience you gain will be minimal. But a demo account does give you positive results. They can help you to learn the software platform more efficiently and eliminate future mistakes when you need to be quick and perfect with what you’re doing. User error is common when first starting out, and a demo account will reduce the chances of this happening to you. Also, a demo account can help you to learn a basic strategy or two. This is actually something that can be beneficial to even the most experienced trader. A good Forex or binary trader will always be evolving their approach to making a profit, and this means varying their strategies once in a while. A demo account can help you to fine tune something with little risk.
The Negative Side of Demo Trading
There’s not a lot of downfalls when it comes to demo trading. Some brokers do make it tough to access these, though. You might have to make a special request with your broker’s customer service department to create an account. This is only a minor inconvenience, though. A bigger problem lies in the amount of time that your demo account will remain open. Many binary brokers will only let you keep your demo account for three days at a time. Forex brokers are only a little better in some cases. These you can usually keep for up to two weeks. That’s hardly enough time to perfect your trading–a process that can take several years. Still, if you study before hand and make the most of the limited time available, you can still learn a lot, even in 72 hours. The point is to work as intelligently as possible.
One other downfall is that you are not using real money when you demo trade and will not feel the same emotional pressure to succeed. It’s one thing to lose $100,000 in fake cash, and quite another to lose $100 that you worked hard to earn. One has no emotional attachment, the other can sting for days and lead to many bad decisions in that time, all of which can magnify your losses. There’s no real way to avoid this until you learn how to trade without emotion, and this can take a long time to learn to do. Once, you learn to trade with your smarts and not your heart, you will begin to see a big difference, especially when you are on a losing streak. Demo trading cannot teach you this, but it can teach you to use your brain when making decisions, which is just as valuable of a skill.