Want to jump straight to the best options broker? Most people prefer Interactive Brokers for their options trades.
Binary options are one of the simplest ways to invest in the financial markets. It’s a preferred way of trading among investors, especially beginners. However, “easy to do” is not enough to be successful. You’ll need to test your success on a free binary options demo account. If things work out there, then you can switch to trading with real money.
The Best Binary Options Demo Accounts:
Table of contents [Show]
- The Best Binary Options Demo Accounts:
- What are Binary Options Trading Demo Accounts?
- Why Use a Demo Account for Binary Options Trading?
- What to Look for in a Binary Options Trading Account
- Red Flags to Watch Out for in a Binary Options Demo Account
- The Best Binary Options Demo Accounts
- 2. IQoption
- 2. Binary.com
- Final Thoughts
What are Binary Options Trading Demo Accounts?
A demo account is a practice trading account which works just the same as a real money account operates. You can test your strategies and success with virtual money on demo accounts. Free binary options demo accounts contain real price moves, so you can check to see if your trading system works without putting your financials at risk.
You’re likely to have access to all available financial assets and all trading tools, just like in a real account, but the “money” in the account is virtual. Also, you can change the amount to adapt to a real-case scenario.
Example: You want to start trading binary options with $5,000 but you are not sure of your strategy.
Solution: You open a free binary options demo account with a broker. You change the virtual amount of money in the account to $5,000. Then you are ready to go same as if you have opened a real binary options account.
Why Use a Demo Account for Binary Options Trading?
The first step you’ll take toward actual trading is to open an actual demo account. There are a few main reasons why you should start by using a demo account.
- Get used to the interface. Most likely, you’ll open a demo account with the broker you’re considering for real money trading. A demo account with this actual broker will get you used to the interface you’ll use once you’re trading with real money. That way, when you start with real money, you’ll know the functionality of the platform you’ll use.
- Practice. If you’re a beginner binary options trader, you’ll need to practice the order-opening process. Call and put binary options can be challenging, so play around with the expiration of the options. Learn how to adapt to different situations on the market using news announcements and financial data releases.
- Test your strategy. Prepare a strategy. To figure out the signals you will use to buy binary options, you’ll need to test and optimize your strategy without risking any money. And you can do this forever until you find out whether your strategy is working.
- Test your money management skills. You’ll need to trade only small parts of your bankroll to avoid bankruptcy. Let’s say you want to deposit $3,000 for trading. You decide that you want to invest $1,500 in each of your trades. If you fail two times in a row, you will go bankrupt.
Question: How likely are you to fail or go bankrupt?
Answer: Very likely. You can avoid this by putting small parts of your bankroll in each trade, say, 1%. This way, you will need to be wrong 100 times in a row to go bankrupt.
If you trade successfully on a demo account, then you can consider switching to a real money account. Apply the same strategies there and you are likely to get the same results.
What to Look for in a Binary Options Trading Account
Your broker research should start before you open the demo account, and the characteristics to look for are listed below.
Be sure to target only regulated brokers. A regulated broker is subject to the law of the country of regulation. After all, you’re giving your money to somebody, and if a dispute arises, you want to make sure that it gets resolved fairly.
Most scam brokers get shut down after a year or two. If a broker has existed for many years, it is less likely that this broker is a fraud.
Positive Online Reviews
Check out what people think of the broker you’re considering. Check for ratings, Google the company’s online reviews. Search for something that may trigger an alert.
Number of Tradeable Assets
A good free binary options demo account will have many tradable assets available. You don’t want to practice on an account that offers you only three currency pairs. Look for diversity. Diversified portfolios are the more secure way to go as you count on many institutions.
Your trading platform needs to be simple, straightforward and easy to understand. If you don’t feel comfortable with the demo account interface of a broker, change the provider. You won’t want to trade real money when you don’t like a particular interface.
Set of Trading Tools
The trading tools are a must for every good demo account for binary options trading. The more tools available, the better. After all, these tools will help you build your trading approach.
All reputable brokers offer dedicated support. Some companies even offer 24/7 support.
Red Flags to Watch Out for in a Binary Options Demo Account
Here are the most common red flags to look for when looking for a binary options broker.
Lack of Regulation
Do you have doubts about the regulation of a broker? Better find another one. Maybe the broker is subject to regulation in a less-developed country, or the regulatory body of that government is at a very low level. How likely is that it resolves a dispute in your favor? How likely is that it has a system for resolving such disputes? If this is the case, then you might want to approach another broker.
It’s always good to compare the charts of the different brokers. They need to look the same. If one is not the same as the others, then somebody might be manipulating these charts. You need to avoid market manipulation.
Online Money Disputes
Google to see if the broker has open money disputes, a major red flag. If it’s blocking withdrawals, you’re likely to find information about this on the internet.
The Best Binary Options Demo Accounts
Check out these top-notch binary options demo accounts.
IQoption’s Key Facts
Regulation: CySEC (Cyprus)
Existence: 5 years
Tradable assets: 49; currency, companies, gold
Interface: Very simple and user-friendly
Trading tools: Decent amount
Support: High – 24/7
IQoption’s demo account platform. Source: IQoption
As you see, the IQoption’s platform is pretty simple. Furthermore, it offers a mobile app platform, which is even easier to use. The order execution is good and you can do plenty of trades for seconds.
You can switch between different charts. The default chart you will get is a line chart. But you can switch to a Japanese candlesticks chart a bar chart or a Heikin-Ashi chart. You can also change the colors of the charts.
In the left panel you have few buttons:
- Total portfolio – shows all your current positions
- Trading history – contains all your past positions
- Chat & support – you can chat with the support or in channels with other traders
- Leader Board – keeps track of the best traders with biggest profits
- Market analysis – news and analysis from different providers
- Video tutorials – you can watch all type of informative videos here
- Help – gives you a hand with administrative and general questions
At the bottom of the chart, you can pick a different time frame. Note that you can also change time frames by scrolling with the mouse.
You can choose between a rich set of trading tools. Some of these are:
Different types of lines:
- Horizontal and vertical lines
- Fibonacci levels
- Moving averages
- Bollinger Bands
- Parabolic Sar
- Alligator Indicator
- Ichimoku Cloud
- Momentum Indicator
There are even more indicators on IQoption. Honestly, they are not that much. But still, your technical analysis will be well supported.
Binary.com’s Key Facts
Regulation: British Isles, Malta
Existence: In operation since 2000, regulated since 2015
Tradable assets: 57; Currency, indices, commodity, volatility indices
Interface: Very simple and user-friendly
Trading tools: A rich set of indicators
Binary.com’s demo account platform. Source: Binary.com
The platform of Binary.com is also simple. It consists of two parts, the upper part for trading and the lower part that contains the chart. These two parts might be a bit confusing as it is hard to look at both of them at once. If you zoom out your browser, you will make it work.
You can regulate the chart time frames from the bottom of the chart. You adjust a horizontal scroll, which shows what part of the chart you are covering.
Binary.com is not that rich on resources as IQoption. But they still have the most needed resources available. A disadvantage is that they only have line and dotted charts available. They don’t have Japanese candlesticks or bars, which might limit your analysis.
But on the other hand, they have plenty of indicators – more than 100. They also have chart templates. So, you can very easily save your template and apply it to another chart.
Demo accounts are a great solution for testing purposes, but you still need to do your research. Fraudulent brokers exist are only looking for ways to make you deposit funds. Even if you win money, they might not let you withdraw your profits. Follow the steps above to avoid scams, too.
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