Binary options trading demo account
Binary options trading is a very popular area of modern online investment. The ability to make quick money with a relatively small investment, a high percentage of profit, the technical availability of online investment platforms - all this makes binary options a very attractive financial instrument.
At the same time, the percentage of losses is also high. Many novice traders, not wanting to understand binary options and study the laws of trading, act by chance, relying solely on their own luck. You certainly shouldn't be doing this. Internet investing is not gambling; Therefore, it is highly recommended to study in detail the principles and methods of binary options trading before investing money. Nowadays, this is easy to do because online trading platforms offer you a whole section of training, in particular with video tutorials on investing and trading binary options.
But the main tool to help you quickly understand how to trade binary options is the demo account. Using a demo account, you can personally see the mechanics of working with binary options and learn how to handle this asset without the risk of losing money.
So what exactly are binary options? How do I open a demo account? All of this will be explained below.
The topic of our review is the best binary options demo account in India.
What are binary options?
What is a binary option? It is a derivative financial instrument, a transaction with specific terms and conditions, and the underlying asset is a real exchange-traded asset. When you enter into a trade you must predict that the price of the asset will rise or fall over a set period of time. Each trade has an expiration time (given by you), at the end of which it becomes clear whether or not your prediction is met - the price will rise or fall. Any financial instrument available on the platform can be used as an asset, be it stocks, currencies, commodities or indices.
Trading binary options is common these days. Many traders invest their funds in options on currencies, commodities, stock indices and shares. Binary options offer the possibility to earn up to 85% of the profit for example on shares of world's biggest companies such as Tesla, Apple, Uber, Pfizer, Alcoa, Netflix and others. In addition to stocks, you can choose commodities (gold, oil), or currencies and stock indices as an asset.
You may also select several assets at the same time.
Binary options allow you to know exactly the payout and the possible risks even before concluding the contract, providing you with the possibility to manage a larger volume of trading operations more easily.
Binary options are similar to regular options, in the sense that their payout depends on the price of the underlying asset at the time of expiration. However, with binary options only the direction of the underlying price is important, not the magnitude of the change. If you anticipate the direction of the option price, you will receive a fixed return, as specified on the platform. However, it is not important, how much the price went up (or down), what is important is the fact that you predicted it correctly.
Binary options, unlike conventional ones, are available to almost everyone on online platforms. Nowadays, almost everyone can make a profit with this financial tool, because all you need is an Internet connection, a computer (or just a mobile phone) and the minimum initial investment is just a few dollars.
But how can one forecast the price movement of an asset to make the trading profitable? Various methods and calculations can help, as will be discussed below.
Tools for predicting price movements
The main reason for most unsuccessful trades in binary options trading is that many novice traders confuse online trading with gambling roulette. Yes, it probably needs a minimum of luck, but still, online investing is not a game, but a whole science, with its own rules and laws.
There are special techniques that help to predict the price of an asset, which is unrealistic to do in a casino.
There are two main types of market analysis, which will help you make correct predictions - fundamental and technical analysis.
Fundamental analysis is based upon a factual analysis of the market, which is based upon examination of actual reports, company or industry news, political pictures and economic news.
As a rule, such forecasts are made for a longer period of time, i.e. fundamental analysis is used when working out economic strategy. The market situations are ready-made solutions, which have to be understood and combined correctly.
Technical analysis is used for short-term transactions. Technical analysis implies knowing how to work with signals. The signals themselves are ready-made solutions, providing traders on online exchanges with an idea of where an option will go.
This type of analysis is based on the use of ready-made indicators. Technical analysis indicators are algorithms that give an indication of future prices using quotes from a specific time frame. Every technical analysis indicator is based on a formula. This formula is used to make calculations. Depending on the type of the indicator or its purpose, the formula may vary. For example, one formula calculates the average price for a certain period, another calculates the closing or opening price of the market, and so on.
Modern and reliable online trading platforms provide a complete set of tools for both fundamental and technical analysis. You will find a news section and an economic calendar on the platform, which will help you if you use fundamental analysis methods. You can set up a news feed in the background directly on your desktop screen, so you don't miss any important news. Or you can remove the news feed from your work screen, if it's distracting to you.
Indicators for technical analysis can be used individually or in any combination, simply by ticking the ones you want or deselecting the tick boxes.
The indicator charts overlay the price chart of the asset, giving a good visual representation for analysis. The platform allows you to choose any time frame to analyse, be it a year, a month or even a few minutes.
Demo account: opening and purpose
The wide variety of financial assets and analysis and trading tools is undoubtedly a big plus and gives traders more opportunities to make money. But how not to get lost in this variety of instruments and methods if you are a new trader?
This is where the demo account can be of great help. All reputable online trading platforms offer you the possibility to open a demo account.
The only difference is that the funds on the demo account are fictitious, and can be used only for testing operations. How to register on the online trading platform, how to open a demo account and how to use it for education purposes - read more below.
Registration on the online trading platform
Generally, registration on most online trading platforms is simplified by entering a minimum set of data, such as username and email, into the registration form on the broker's website. This is enough to create an account, a real and demo account and to carry out all necessary operations. At the stage of withdrawing funds from the platform, you may need to provide additional user verification, which is provided in order to ensure the safety of your funds. The additional verification will be easily handled by following the automatic prompts of the system.
Opening a demo account
The system offers you to open a demo account as soon as you login to the platform for the first time. Just click on the "demo account" option and you will immediately see a dummy amount on your account balance, in the amount stipulated by the specific trading platform. As said before, these funds are totally fictitious and you will not be able to withdraw them from the platform. But you have the option to use this fictitious virtual money for test operations on the platform.
Remarkably, a demo account is absolutely no different from a real one, except for the fictitious amount. All of the quotes that you will see on the platform, as well as the transactions that you will conduct from your demo account, are real. That means that you will be able to analyse which operations were successful and profitable, and which were unsuccessful and unprofitable.
The only thing that will make these transactions different from real trading is the operation of fictitious money, which, on the one hand will not bring you any real profit, but, on the other hand, will protect you from possible losses.
Most platforms allow you to update the amount of fictitious money on your demo account as required. Using a demo account is free, and there is no time limit.
The possibility of opening a demo account is one of the main features of a reliable online platform. Choose platforms that offer this possibility.
Using a demo account
Use the demo account to test how the online platform works in practice, as well as to test trading strategies and choose your own strategy, practice money management skills, try out the functionality of the platform, learn the use of indicators and trading tools.
Start by choosing a financial instrument. Traders, as a rule, are not limited to one asset. Try several different financial markets so you can draw your own conclusions as to what suits you personally. Here are the basic tools and features you should test using a demo account.
Learn to use technical analysis indicators
Learn how to use technical analysis indicators. This is a tricky subject, especially if you are a novice trader. The video tutorials, which you will find on almost every good platform in the education section, will be helpful. Watch the tutorial, and then try out the same indicator while you're testing out a demo account. Examine several indicators, taking turns testing your own technical analysis with a demo account. Alternating theoretical learning with a video lesson with practical learning with a demo account will bring faster and better results.
Learn how to work with leverage
The multiplier is an option with which you can easily enable the leverage feature by simply selecting the right multiplier. Leverage is, in simple terms, the borrowed funds that a broker allocates to a trade. It may be different, for example 1:10 or 1:100, or even more. What does 1:100 leverage mean? It means that the broker virtually allocates to you funds which are 100 times higher than yours. In other words, leverage allows the trader to make trades at a cost much higher than their own account equity. You can also risk losing your deposit and your funds in the account, as the losses will increase as the amount of the transaction increases. So it is important to test with a demo account how the leverage feature works, and only after you have a clear understanding of how leverage works, can you use this feature in real trading.
Test how to place stop orders
You can and should use stop orders to secure your trades. What is a stop order? It is the ability to set an upper (take profit) or lower (stop loss) limit on an operation. That is, a stop loss will automatically close your trade when the price of the asset reaches a certain minimum you have specified, while a take profit will help you "take out" the profit when the price of the asset reaches a certain maximum you have specified. Take Profit and Stop Loss can help insure a trader's position in any situation. Regardless of volatility or connection to the broker's server, your positions will close at the levels you specify.
Again, to see how stop orders work in practice, try placing them on a test trade from a demo account.
Advantages of online platforms with a demo account
With a demo account you can become familiar with the platform and practice all the tools and features you need.
Trading binary options is profitable enough if you learn how to analyse the behaviour of an asset and develop your own trading strategy.
There are many binary options trading techniques as well as trading tools to help you increase the size of the trade or automate the closing of the trade, and so on. All these features can be explored on a demo account.
In fact, the importance of a demo account can hardly be overestimated, as it allows us to gain experience, learn, but not to risk our own money.
Of course, operations on a demo account will not bring us real profit - for that sooner or later we will need to activate a real account, but it will help us understand all the subtleties of online trading.
If you are choosing a platform to trade binary options in India, give preference to those platforms that have the possibility to open a demo account.
Once you have chosen a platform, open a demo account today and try your hand as a binary options trader - it's completely free!