When compared with the forex market, there is a relative paucity of binary options demo accounts. This is probably a consequence of the uniqueness of the market setting in terms of its relative novelty when compared with other financial markets. However, dealers in the binary options market place are beginning to deal with the problem by providing simulated account platforms for traders just like their forex counterparts do.
There are some peculiarities in the binary options market that traders need to be aware of and the only way to get familiar with these is by testing out the trade process on a binary options virtual account.
Types of Demo Accounts
Binary options simulated trading platforms can be classified into two:
a) A limited (obligatory) platform
b) An unlimited (non-obligatory) platform which comes for free
In the forex market, traders get a free and unlimited virtual trade access which is non-obligatory. I have used some virtual software in forex for up to 5 years. But the situation in the fixed odds options market is entirely different, as most brokers offer virtual account platforms which obligate the trader to open a live trading portfolio, and with some other brokers, this access can only be used for a limited time. Examples of dealers that provide either limited simulated trading or obligate traders to open live platforms are Banc de Binary, Nadex and Opteck.
In contrast, there are few brokers who provide free demo access binary options for an unlimited period of time, and do not force traders to open and make deposits into live portfolios to enjoy the benefits of simulated trades. BOM is one of such dealers. Indeed, some have taken it up a notch by introducing free, no-deposit bonus accounts. These free platforms function like virtual applications but are real accounts with no time limits. There is no need to deposit any money, and yet there are funds in a live platform, a no-risk scenario for the user. Examples of such brokerage option firms are iOption and TradeRush.
Benefits of Binary Options Demo Trading
Why is it necessary for traders in the binary options market to start using simulated trade account platforms? Some of the cogent reasons can be summarised as follows:
Shortens the Learning Curve
A digital option trading platform in simulated mode can teach certain things that can never be learnt in the classroom, a webinar or from an ebook. A mistake made on a demo account platform can never be forgotten. Airlines know this and that is why pilots go for simulator drills and exams twice in a year. In markets like the forex market, profits are clearly a function of how many pips the trade has gone the user’s way. In the fixed return option market, things work differently. It is on a demo option account platform that all the trade types can be mastered as well as the techniques how to trade them all. From there, it is easier to specialize in one or two trade types and become proficient in them. This is a free learning experience which can be used for life.
It is possible to test trade strategies freely, develop new ones or modify existing ones to fit the trading style. The demo account platform permits the user to perform a number of tweaks. If a no-deposit trading bonus is used, then this is the best opportunity to try out strategies in live market conditions.
Whatever type you decide to use, make sure the broker you choose offers a virtual account with no time limitations.