Virtual trading is a way of trading binary options risk-free. If used correctly, it can help you test yourself and your strategy, and develop a profitable trading style almost risk-free. This articles explains how virtual trading can help you become a successful binary options trader and how you can get started.
In detail, this article answers these questions:
With this knowledge, you will immediately be able to improve your binary options trading with virtual trading.
Virtual trading means trading binary options in a virtual environment. Instead of investing real money, you trade with play money. Everything else is the exact same as with regular trading. You get the same tools, the same features, and the same trading style.
The only difference between regular trading and virtual trading is that regular trading has consequences while virtual trading happens in a simulated environment. All the price, assets, and binary options types are real, but the profits or losses that you make with them are not. You are more or less playing a game based on the real world instead of investing for real.
There are two basic forms of virtual trading. They are:
Demo accounts are accounts that offer you the same functions as a regular trading account. They offer you the same features as a regular trading account, the same binary option types, and the same assets.
The big difference between a demo account and regular trading accounts is that demo accounts allow you to trade with play money instead of real money. When you get a new demo account, there will be a certain amount of play money waiting for you. The exact amount varies from broker to broker.
In this environment, you can trade just like you would with a real account, but you are free from any risk. You can try anything you like, but you will not lose a single Cent. You get the real prices and market movements, and any decision that you make based on them will seem completely real.
If you want, you can use your demo account like a game. The only difference is that if you are good at binary options trading, you can turn the game into reality and earn money. Demo accounts are a great way for people who have never tried binary options to see if they have what it takes to succeed in this environment.
Paper trading is the original form of virtual trading. It is somewhat outdated, but we wanted to mention it at this point as an alternative to demo accounts. If a demo account is impossible to get for you, you can always fall back on paper trading.
As the name indicates, paper trading happens entirely on paper. Instead of investing in a real binary option, you monitor the market until you find a situation in which you would invest based on your strategy. Note the details of the trade – the asset, the expiry, the investment, and the payout. Now wait until you option would expire and note whether you would have won or lost the trade. Also calculate the profit or the loss you would have made.
After a while, take a look at your notes, and calculate whether you would have made a profit on the whole.
This type of virtual trading is ideal for traders who are unable to use a demo account for some reason. If you can use a demo account, however, there is no reason to fall back on paper trading. A demo account can automatically do many of the things that you have do by hand with paper trading, which is why it is the superior alternative in 99 percent of all cases.
Now you might ask why should use virtual trading. After all, the point of financial investments is making money. When you trade with play money instead of real money, this is impossible. Nonetheless, there are plenty of good reasons why every trader should use virtual trading. Let’s take a closer look at these reasons.
There are three main reason for using virtual trading. They are:
Each of these advantages applies to brokers at a specific stage of their career. Let’s take a closer look at each of these advantages.
Binary options brokers are like cars. They all promise to be the best and most reliable. The only of knowing which of them live up to their promises is testing them. Virtual trading is the equivalent of a test drive.
Just like cars, the differences between brokers are often small and difficult to pinpoint. Some brokers just feel more comfortable than others. This difference is highly subjective, and the only way of knowing which broker is right for you is testing a few brokers with their demos.
Additionally, all brokers offer different payouts in different market situations. It is impossible to say which broker offers the best payouts for your strategy. Some traders do better with one broker, other traders do better with another. Once again, the only way of knowing which broker is best for you is virtual trading.
In our broker list, we have listed the best brokers on the market right now. All of these brokers are trustworthy, government regulated, and completely trustworthy. But we are unable to tell you which of these brokers is best for you. You will do well with all of them, but if you want to make the best decision possible, you have to test them for yourself.
Once you have found a broker you like, you have to develop a profitable strategy. Just like all newcomers to any field, you are highly unlikely to get things perfectly right with your first try. You are probably going to make a few rookie mistakes and do a few things that lose you trades. The consequences of these lost trades can be severe and could possible ruin you – unless you make them in the risk-free environment of virtual trading.
A demo account allows you to trade just like you would with a real account but avoid the consequences. Since newcomers face mostly negative consequences due to inexperience, a demo account is the ideal tool for them.
We recommend that all newcomers start their career with a demo account. Trade just like you would with a real account, and check your account balance on a weekly basis. Did you earn or lose money this week? If you lost money, why? What can you do to improve?
Ask yourself these questions until you make a profit. Keep trying new things and improving your strategy, and you will eventually develop a strategy of which you know that it makes you money.
Once you were able to turn a profit three or four weeks in a row, it is probably time to switch to real-money trading. Since you are already familiar with your broker and your strategy, you should be able to turn a profit right from the start.
Once you created a profitable strategy, you have two goals:
These two reasons are why you have to keep testing modifications to your strategy. Unfortunately, you never know whether modifications will actually improve the quality of your trading or reduce it. Even when they seem like a sure thing, there is always a chance that your changes ruin your entire strategy and, as a result, could possibly ruin you.
This is why you want to test changes in a risk-free environment before you apply them to your real-money trading. Virtual trading offers you the perfect environment for this test.
There are two ways in which you can use your virtual trading to test modifications to your strategy:
We recommend that every trader should use a demo account to try modifications to their strategy. Even if you have traded well for 30 years, seeing the market from a different perspective can only help.
Many successful traders dedicate a fixed time of the year to testing new things. For example, you could pause your real trading for one month of the year and try new things, or you could take a few days each month for virtual trading.
Almost all binary options brokers now offer demo accounts. To get the best virtual environment, we recommend newcomers to try IQ Option.
IQ Option provides the invaluable advantage of a deposit-free demo. Some brokers offer their demos as features of their regular accounts. You have to get a regular trading account to get the demo, and getting a regular trading account requires you to deposit money. This means you have to deposit money with a broker in order to test it.
These demos are free, too. If you don’t like the broker, you can simply withdraw your money and be done with it. But why deposit money with a broker if you are unsure whether you want to trade with it?
The IQ Option demo is completely deposit-free. You can sign up for the demo by simply logging in with your Facebook account, your Google account, or your email. This is the easiest start you can get to binary options, and it is the way things should be.
Additionally, IQ Option is the highest-rated broker based on customer satisfaction in our broker top list. You get high payouts, great assets, and great binary options types. The deposit-free demo allows you to test the best broker out there completely hassle-free.
If you can have the best thing for free, why would you test anything else?
Of course, there is still a chance that IQ Option is not the right broker for you. In this case, you should continue testing other brokers. But it can’t hurt to start with the best bet first.
Today, the most relevant form of virtual trading is a demo account. Demo accounts allow you to trade all features of a broker completely risk-free, which is the right environment to test yourself, the broker, and create a successful strategy.
If you are still looking for the right broker for your virtual trading, we recommend taking a look at our broker list.