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Pros and cons of a demo account

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Newbies often ask about demo accounts. A demo account is an account with virtual money given to any customer without investing real money but with the possibility to trade binary options. Even experienced traders also sometimes ask for demo accounts in order to check a broker and his or her trading platform before they invest.

In this article, I want to analyze the advantages and disadvantages of demo accounts. The main advantage is each client can actually test the broker’s site, trading platform, quotes, trading tools and assets,so he or she can trade without investing real money.

Moreover, demo accounts are great for traders who decide to test their own trading strategies before risking their real money. The literature gives some examples, such as trade on paper, i.e., you don’t make any investment and you just record all the transactions that you’d make if you had the real account. However, today, this method is not as popular since more brokers provide the ability to open demo accounts.

At the same time, there is quite a big disadvantage, which is usually faced by many newcomers.

This disadvantage lies in psychology. People who are constantly trading on demo accounts change their attitude toward real money. This psychological moment causes deterioration of the results after the trader starts to use the real account. He or she doesn’t apply the same significance to virtual money as to his or her own, so the transactions are made without analysis.

The trader fails to properly assess the situation and realize the possibility of a real loss. The attitude to real money becomes less anxious, the fear of losing money disappears, and discipline vanishes. The trader is controlled by his or her emotions.

Therefore, we must understand that in order to start making good money with binary options, we must try to be brave and not go from one demo account to another. Don’t be afraid to take a step in the right direction.

Comments

Brandon's picture

A free demo account that you can sign up to use without depositing any money. In fact, they promote the demo account by making sure that every trader knows it is available when accepting the terms of use. And, CTOption offers completely 'Free Demo Account' for all.

Brandon (not verified)
Zoran D.'s picture

Yeah, many brokers offer demo after accepting the terms of use and making the deposit. Of course, it's better to search brokers which allow demo account without deposit.

Zoran D.
TommyL's picture

I don't know why, but trading with demo differs from trading with real account. I make progress at demo but loss at real.

TommyL
@FreemanZ's picture

TommyL, what is your broker? Check your broker. I think it's better to find another broker if the quotes differ.

@FreemanZ
@FreemanZ's picture

Demo account really helps me as well as the trader's diary. However, I usually trade demo with MT. It's more easier. Than I use my tactics at my real account with 24 option.

@FreemanZ
TommyL's picture

No the quotes don't differ. I think it's because of my attitude. I'm alarmed when I see as the price goes against my prediction. So it takes too much time me to make the decision and buy option.

TommyL
Vizory's picture

That happens and not only with you. Many people encounter that, don't worry, with time it'll go away=)

Vizory
SanPaulo's picture

As for me, demo account is used for newbies. Experience trader usually uses 1-2 assets and he knows it well. He has the profitable trading strategy. Is it worth to test another strategy, to make demo account, waste your time if you have strategy and get stable profit.

SanPaulo
Vizory's picture

I'm also using it, only for checking and setting my trading strategy. I don't know what else an experienced trader can use his demo for. And I've never seen people who've traded on a demo for over a year.

Vizory
riksa18's picture

Trading demo account helps you to get familiar with the brokers' trading system also. It is also helpful in analysing which strategy suits you the best. I must suggest newbie to trade demo accounts for at least 6 months or so if they wish to become successful in future.

It is also advisable to open demo accounts with two or three brokers in the start and trade them. That's not only help you learn quickly but at the same time you will be able to get familiar with the internal systems of these three brokers and it will be easier for you to chose which broker is best.

riksa18