Why Is Trading On a Demo So Important

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Why Is Trading On a Demo So Important

Trading on a demo is vital for success in the binary options market. Today most of the binary options brokers offer a free demo account to get you on-board but you’ll often find that your demo account is limited to $1000 or 14 days or that you need to open a live account simultaneously.

The traders should therefore appreciate and utilise a free demo account when they get the chance. There used to be a time when there was not a single broker that provided demo accounts.

As competition grew, a few brokers started to provide them but with certain conditions attached. Only a handful of proprietary binary options brokers provide their traders with unlimited demo accounts with no commitments to fund and trade.

Perhaps one of the reasons why we do not have so many binary options free and unlimited demo accounts is because traders do not understand why they are necessary.

There are several reasons why trading on a demo account is vital for success in binary options. Some of these reasons are:

  • Getting a feel for the platform
  • Perfecting trading strategies
  • Understanding the structure and function of the market
  • Optimizing your trading tools

Let us take each of them one after the other.

Getting a feel for the platform

We all must have heard the saying ‘practice makes perfect’. The more you engage in an activity, the better you will be at it. Establishments do not subject their staff or personnel to the real thing immediately, but rather subject them to simulations, drills and various forms of practice runs before they are introduced into the real stuff.

That is why aircraft pilots have simulators to train them, military personnel are subjected to drills and people who legally own firearms or who by the nature of their jobs have to use them, go to shooting ranges to practice how to handle firearms and fire accurately with them.

It is the same with binary options trading.

A demo account is the practice shooting range. This is where the trader will practice a number of things in order to gain mastery of the trading platform and a feel for the market.

Testing and practice work best in an environment where there is no emotional and financial pressure, and the best place to do this is on a demo account.

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  • Binomo
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    Only For Experienced Traders!

There are those who believe that practice should be done in a low-capital live account, but it is best to start with a demo account and then proceed to a live account with very small money in it to further the practice sessions in a live environment.

Perfecting your trading strategies

The demo account is also where strategies are perfected, especially when those strategies are novel. Strategies built to work as automated programs must be thoroughly tested with a demo account.

Any bugs or malfunctions in such strategies can be detected, taken care of, further tested and then deployed in a live situation.

If you decide to subscribe to professional trading signals than you must always test them on a demo account to see if they work as advertised before you start trading on a live account.

Understanding the structure and function of the market

The structure and function of the binary options market is a key component of success in this market. Binary options have unique features which must be understood.

One of these features is that all trades expire. So how does a trader make trade calls that must be found to be accurate when the time allocated to the trade expires? How are orders placed? How is risk spread or allocated to each trade? How are different assets traded on the platforms?

These questions form the crux of the structure and function of the market, which can be better understood with a demo account.

The demo account will help the trader understand what assets are available for trading at certain times. Payouts tend to dwindle if trades are placed closer to the set expiry times. How can this be proven, or can we say, how can this be tested? It is only by actually setting such trades close to expiry times on a demo account to actually see if this is the case or not.

How do functions like the Double Up, Rollover or Early Closure functions work? The trader can learn this by setting the trades on a demo account and then using these functions.

This way, you can actually get to know what the true situation is and have the knowledge for yourself, as opposed to taking what is written somewhere on the internet as fact even when it may not be accurate.

Optimizing your trading tools

The binary options market has evolved heavily from the early days and it is fairly common practice now to use tools such as indicators and automated trading bots as part of the trading arsenal.

Traders can actually optimize these tools on a demo account. The demo account can therefore serve as the place where trade tools are optimized and perfected for use.

For instance, the auto pivot point calculator has been around for several years and several versions are available. But some programmers have used demo accounts to tweak the indicator and add several elements to it. Now you have versions that are optimized for weekly periods, as well as, versions that are tied to Fibonacci numbers.

These kinds of tweaks and optimizations are usually done on demo accounts and this is why they are so important.

Conclusion

Now that you know what demo accounts can do for you in binary options, demand from your broker to provide one for you with user friendly conditions. If you are given a time-limited version, please use this time period well and test out all the platform’s features and tools.

Why trade forex

Forex is the most traded market in the world and when you understand the benefits of the market, it is easy to understand why.

24 Hour trading, 5 days a week

Unlike other markets, forex trading doesn’t have to stop when the sun goes down. Since forex is traded all over the world, trading markets are open 24 hours a day, 5 days a week, so you can trade when it is convenient for you.

No commissions or hidden costs

The costs of trading at FOREX.com are included in the spread—there are no hidden fees or commissions, so you can be confident knowing how much your trade is costing you.

Trading opportunities in bull and bear markets

The forex market offers traders the unique advantage of trading opportunities in both rising and falling markets. And unlike other markets, there are no restrictions or additional costs for short selling.

Trade more with less

Forex is traded with a degree of leverage, allowing you to take a position in the market with a fraction of the capital you would usually need. As much as leverage may increase your gains, it can also increase your losses so it’s important that you understand the risks of trading on margin.

Unmatched liquidity

With daily turnover reaching $5.1 trillion,* forex is the most liquid market in the world. This liquidity often results in more actionable prices and unlike other financial markets, traders can respond almost immediately to currency fluctuations, whenever they occur – 24 hours a day, 5 days a week.

Wide range of markets

Forex trading allows you to easily gain exposure to markets around the world. While most trading is done in the world’s major currencies, you also have access to emerging markets such as Mexican Peso (MXN) and Polish Zloty (PLN).

* April 2020 Interbank Forex Market average daily volume from Bank for International Settlements.

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Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through its affiliate, GAIN Capital UK Ltd, Park House, 16 Finsbury Circus, London, EC2M 7EB, United Kingdom.

GAIN Global Markets Inc. is part of the GAIN Capital Holdings, Inc. group of companies, which has its principal place of business at 135 US Hwy 202/206, Bedminster, NJ 07921, USA.

Why Is Trading Complicated?

No matter what people say, trading is complicated. There is no magic pill that can turn a newcomer into a trading guru in a blink of an eye. And there is no single best strategy that suits everyone. In order to become a trader, people spend years and dedicate a lot of time and effort to their pursuit. And still, many of them fail. Why is trading so complicated and how to get over complexities? Read the article to find the answers.

Changing markets

Markets are never the same. They are ever-changing and ever evolving, it is a part of their nature. Chances are, you will never witness identical market conditions twice. The reason for this is the sheer number of factors that influence the performance of the assets you trade. The price of an asset is influenced by hundreds if not thousands of different factors. Every time you look at the price chart the conditions are likely to be different. International markets are complex financial systems — hence, the complexity of interacting with them.

How does one address this issue? Despite all the complexities, there are certain techniques that may assist with estimating the future performance of a particular asset. As mentioned previously, markets are not static and market conditions are rarely identical. Yet, there are certain patterns that repeat themselves. Said patterns can be spotted and used in trading. The former might be used as signals that you receive and act upon but, of course, should be double checked for a confirmation.

Human factor

Human nature plays an important role in trading. No matter whether you consider it to be a drawback or a source of additional opportunities, this is something that simply cannot be denied. After all, it is we, humans, that open and close deals, buy and sell assets from and to each other.

How to cope with the human factor when trading any asset on any time frame? There are several ways to do so. As a retail investor, you cannot influence the behavior of other investors, but you can change your own attitude. This is something you have probably already heard (and heard more than once). All you have to do is eliminate, or rather minimize the human factor in your own trading. For this exact purpose, try to get rid of emotions , both positive and negative, as they can negatively affect your trading performance. Trading according to your trading strategy, not the gut feeling, and you will manage the unnecessary risks associated with human fallacies.

Abundance of information

We have to admit that at this point the amount of information that tries to explain how markets work has itself become a problem. Oftentimes, it is impossible for a novice trader to navigate himself in the sea of trading-related knowledge. Hence, another degree of complexity.

There is so much you can learn about trading and financial markets that it is sometimes easy to get lost. Books, articles, guides — you have to learn a lot before you even grasp the basics of trading. When you move on to a more advanced level, knowledge itself is not enough, as you will require extensive first-hand experience. As if that wasn’t enough, there are countless ways to analyze the market and predict the future price of the asset. All of them require a thorough understanding of a particular technical analysis tool.

What is the possible solution to this problem? Focus. Focus on one asset type, one timeframe and one trading strategy at a time. It is much easier to get lost when you do not have a clear picture of what you are doing. Different assets are traded differently and require different strategies. Different timeframes utilize different types of analysis. Different analysis tools provide different signals. In trading, all these things matter. Therefore, you might want to choose one in each category and master them first before jumping to something else.

Conclusion

As you can see, overall complex nature of the financial markets is a result of its constituent parts being complex. Today we have covered three of them. It is easier to work with complex systems when you break them down into bite-sized and easily digestible pieces. In this case, it is easier to fight different hurdles one-on-one, and not the system at large.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners!
    Big Sign-Up Bonus!
    Free Trading Education!
    Free Demo Account!

  • Binomo
    Binomo

    Only For Experienced Traders!

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