What is a demo accounts: the types of demo accounts
Demo Account is technically the same live account with virtual money. Demo accounts help you learn the tools to become skilled to work with the terminal or broker trading platform, understand the specifics and market functionality, test the effectiveness of your own trading strategies. Most demo accounts provided by a variety of binary options brokers are free to open and can be used indefinitely.
At first glance, a binary options demo account seems to be a simple tool giving a great chance for beginners to practice without risk of losing personal funds. However, in practice it is not so simple. There are 3 main types of demo accounts provided by modern binary brokers:
A full demo account is available after registration on the broker’s website, after which the customer can use a demo account with a fixed starting amount and trade for free with no restrictions.
‘Shareware’ demo account (without registration) is kind of trade simulation. There is only an imitation of trading platform an imitation of trading, no trading account created. Most brokers with no pre-registration offer ‘shareware’ demo trading.
Major brokers offer chargeable demo accounts only when recharge your live trading account with the amount of minimum deposit and higher.
Disadvantages of binary demo accounts
Demo account with no pre-registration required (or ‘shareware’ demo accounts) is an interactive platform with a variety of visual clues. This platform is clear even for beginners, and requires no long-term study to begin trading. However, such a platform has significant disadvantages, which subsequently may affect the options idea of future trader negatively. This type of demo accounts originally is a ‘stripped down’ version of the real account without revealing the full potential of binary options, having a few trading opportunities, assets and tools to trade (expiration time, etc.). In addition, some binary brokers may seem more attractive by overestimating its yield percentage, making a trader to estimate incorrectly his profitability and money management.
On the basis of information derived from such unimproved product, a trader may have the wrong idea of binary options market, which is quite logical considering limited trading opportunities and deliberately overstated profitability of ‘shareware’ demo accounts.
Advantages of binary demo accounts
Working with demo accounts has more pros than cons, but all of them require pre- or subsequent compulsory registration. The need for registration becomes obvious after studying a number of pros associated with the use of full or chargeable demo accounts.
Advantage #1. Non-Deposit bonus
Binary options with non-deposit bonus for registration are very common phenomenon in recent years. The principle of non-deposit bonus is that after registration, the trader gets a demo account with a certain amount of funds that may be transferred into a real account and withdrawn as a personal means. However, a customer has to fulfil one of the following conditions:
adjustment of non-deposit bonuses amount of different multiplicity. For example, after the end of the period of non-deposit bonus you should have the amount exceeding the bonus in two or more times;
replenishment of a real personal expense. To withdraw bonus money and profits, you need to replenish your account in order to update it from demo to real trading status
commit a certain volume of trade transactions. To withdraw bonus money and profits, you need fulfil a total number of transactions in amount 5 times exceeded the bonus amount, etc.
It is obvious that the main purpose of a demo account with non-deposit bonus is a trader’s registration, namely attracting him in as a new customer.
However, demo accounts with non-deposit bonuses are a great opportunity to experience not only all the details and pitfalls of real trade, but also to try your luck and earn money wisely without investing.
Advantage #2. Risk-free transactions
Some brokers take the unprecedented step and offer clients who have signed in, a 100% reimbursement of losing trades. That is, a customer replenishes his deposit, opens a trading account and starts trading, while having a number of break-even transaction provided by the broker. Naturally, this trading is carried in a separate demonstration account, but is available only after the customer registered and replenished deposit on the broker’s account.
Advantage #3. Forex brokers that offer binary trading
A third advantage are full demo accounts offered by Forex brokers, who in addition to the traditional Forex trading, offer binary options trading. Platforms in these brokers may be web and stationary, such as meta trader. Such demo account fully reflect the real picture of the trade and are essential as a “simulator”, where you can try out your own strategy and evaluate the work of a particular indicator.
Obviously, the options with demo account is a common phenomenon contributing to the product promotion. However, the demo account on binary options without registration and demo account opened at a binary broker after registration, which concepts must be clearly distinguished with a preference for the latter. Remember, you should not fear of registering at a broker. It will not oblige you to anything, but to identification, which is required to protect your assets and details of future profits. In return, your registration requires the broker to provide you with high-quality commercial, financial and advisory services, which you can fully evaluate only on the client’s rights.