He who doesn’t risk never gets to drink champagne – it’s quite a common saying that can hardly be accused of not being true in reality. Because it is brutal: the one who reaps profits is able to take the risk of losses on their own shoulders.
Just as hard it is to talk about a child which goes through a major artery in the city, that it is bold, as hard it is to talk about the investor, that they are good when they bet at random. We could say that the child is bold if it would cross the street being fully aware of the dangers. About the investor we could say that they are good if they would achieve very good results, consciously managing the investment risk.
The key word in both situations is the ability to manage risk.
Before you start to seriously invest in binary options, you need to learn how to manage the risks associated with investing in this market. In general, the principle of using each type of investment is simple: the higher the potential profits, the higher the risk of loss.
Therefore, we cannot base our strategy of investing in the binary options market counting on a fluke. To invest successfully we need to have knowledge about the market, methods to create investment strategies and methods to reduce and manage investment risk.
Why set up a demo account?
Probably now you are wondering how you learn to invest and at the same time reduce the risk of real loss of cash. The answer is simple: open the demo account. Acting on it, you will be able to almost at will test investment strategies and explore the ins and outs of binary options market.
Demo account allows you to perform a realistic simulation. Not only can you test different strategies to try to build your own strategy but – which is nonetheless important – thanks to the creation of a demo account you will be able to calmly assess whether a trading platform meets your requirements in terms of usability and readability.
Binary options trading requires from the investor sometimes a very fast – almost immediate – response to the situation on the market. Therefore, it is useful to know the investment platform like our own pocket, to not to waste time wandering around the settings and looking for the appropriate configuration.
What are the types of binary options demo accounts?
In 2008, binary options market was deregulated what initially meant for investors the lack of availability of demo accounts. Fortunately, these started to appear back on the market in 2010 and today are still available for people interested in starting to invest in binary options.
However, not all brokers offer the same demo accounts. There are those who offer unlimited accounts. There are those who place specific requirements upon novice investors.
For the purposes of this article, I’ve written up a brief characteristic of individual types of demo accounts for investing in binary options.
#1 Demo for live type account
This account is only available to players who are already investing using the normal accounts. As you can see, even experienced players can benefit a lot from demonstration accounts. It is on them that they can test changes in their investment strategies or implement and evaluate a completely new approach to investing in binary options.
A good example of a demo account for live is an account that is offered by Banc de Binary, which is available to customers since 2011. However, to be able to use it, you need to deposit into your normal investment account at least half a thousand dollars. In the case of 24Option a deposit of $ 200 is required to be able to use the demo account. Another broker that has this kind of account in their portfolio is Anyoption – in this case there are no requirements put reg. the value of the deposit on the real account. However, it is offered – what is clearly stated – for permanent and regular clients.
Investors can use demo accounts for live for as long as they are using their normal investment accounts. If someone wants to close their account, they also must keep in mind that access to the demo account will be taken away from them.
# 2 Free and unlimited demo accounts
This kind of demonstration accounts seems to be the most popular among novice investors. The broker, which comes out to meet these expectations, is the Betonmarkets (BOM) company. In this case we wont experience there requirements reg. the creation of real account, the deposit maintenance. This kind of demo account can be used by an investor without a time limit.
So if you are looking for a demo account on which you would like to learn how binary options market works and test various investment strategies, search for accounts just as the one I now described.
# 3 Free, but limited demo accounts
These are accounts for the service of which you do not have to pay but the access to them is limited in time. This is a good choice for someone who wants to, in a short period of time, see whether the binary options – as they say – are for them.
One of the brokers, who have this type of account in their offer is Anyoption. What is worth stressing is the fact that Anyoption’s demo account offers exactly the same conditions of investment just like a normal investment account. For 30 days you have 500 dollars that you can invest in the binary options market in any way you want and see what the effect will be.
You need to know when to switch from a demo account to a normal trading account
Emotions are very rarely brought up in the context of investing. As a rule, everyone focuses on facts, discusses the indicators needed for analysis and forecasting, describes specific investment strategies or show historical data reg. the profits achieved on the binary options by a specific group of investors. All of this is important. Very important.
However, it is not enough to successfully invest in the binary options market, and actually in all markets. Why?
Because contrary to what economists assume in their hypotheses, the man is not a creature which always acts rationally. On the contrary – we rather act less reasonably most of the time. As a rule, we intuitively follow our emotions and only after some time we try to analyze and assess the situation, as it is often said – coldly.
In the case of investing a later option turns out to be too commonly a too late option. Here there is no time to analyze the situation. Here, everything is changing very dynamically and to achieve something, you need to match the rhythm of your work as an investor to how the market works.
That is why it is so important to learn not only how to manage an investment strategy or evaluate the investment risk, but to also learn how to hold your nerves in check. And believe me, the emotions in the case of investment in binary options on high stakes are really big.
Demo accounts can bring the investor into a dead-end
As much as you can refine your trading strategy to perfection when playing on a demo account you will not learn how to manage your own emotions, unless you will invest your real capital.
Therefore, the demonstration accounts are an ideal solution for novice investors, but only up to a certain stage of their development. At some point you have to make a bold decision and open a normal trading account and on its base check how does our investment strategy work, whether we are able to carry the baggage of emotions that accompanies investing in binary options.
This stage cannot be skipped. You just have to deal with these mixed emotions. We have to see how we behave in the face of changes in the market and if we are able to stick to the strategy even in the periods of greatest turbulences.
The good news is that with the passage of time almost every investor learns to look at their investments from a perspective, suppressing their emotions.
In short, yes to demonstration accounts, especially if you are still not sure whether binary options market is the market on which you would like to invest your savings in the long term. On this kind of accounts you can – and should – test different strategies to fathom the capabilities of the platform and see how it behaves.
However, you must remember that people are governed by emotions, and following them not always ends well, especially when it is about any kind of investing. Let’s be honest: the use of demonstration accounts is not associated with some special emotions, only investing on the real account makes us feel this specific thrill. That’s why at some point you’ll have to get out of your comfort zone and replace the demo account with a normal account. And even though you will already have a good theoretical basis, the truth about what kind of investor you will be shall be found only in the moment in which you will have to face a real market. Experience shows that the management of emotions can also be learned, so don’t panic during first losses, simply try to look at the market every day with more distance.