The other day as was skimming through the forum I came across some comments that made me start thinking. The conversation was about demo accounts, whether or not they were useful and where to get one. What made me stop and think was the nature of how some brokers are using demo accounts. I am a true believer when it comes to demo trading. There just is not substitute for the practice, it builds confidence and experience that a trader needs in order to be successful. In your demo account you can practice money management, experiment with new tools and hone your trading skills. The very best brokers in the binary world will provide you with a free demo account with no strings attached. It is usually an offshoot of your main account and can be used whenever you want for as long as you want. Unfortunately this is not true of all brokers. In fact, what I have discovered has led me to believe that at some brokers a demo account is nothing but a sneaky bonus and a scam to get your deposit.
Free Demo Account With Deposit, Yeah Right
What do I mean? I mean that for some brokers the “free demo account” is nothing more than an underhanded way to get you to accept a bonus. Yes folks, that’s right. As a tool demo trading is without equal. But again, as a tool it must come with no strings or it doesn’t serve its purpose. Any broker that makes you deposit money in order to get a demo account is bogus, plain and simple. Why? Because they are not giving you a demo account, they are giving you the equivalent of bonus money and you will be screwed because of it. A demo account, a true demo account, is separate from your live account and not included in any of your balances and has no association with your funds. This is not true of most brokers who require a deposit. They simply add a “demo” amount to your deposit based on the size of that deposit. If you want more demo money you need to deposit more money. If you run out of demo money you need to deposit more money. Sounds familiar right?
If you think that this sounds a lot like a bonus then you are correct. It is exactly like a bonus and therefore highly suspicious. In most cases depositing for a demo account will entangle you with terms similar to bonus terms and prevent you from making withdrawals. Even if there is no minimum trade balance required to clear the demo account most brokers will have a minimum trade amount regardless of account, bonus or demo size before they allow you to make any withdrawals whatsoever. And if you make additional deposits for additional demo money the web of entanglement will get deeper and deeper. The moral of this story? Do not make a deposit simply to get a demo account.
Not All Demo’s Require A Deposit
Most brokers will provide an actual free demo account but it will come with a time or money limit or both. This means that it will expire in a set amount of time or when you trade the balance down to zero. These are OK but intended more to get you familiar with the broker so you make an eventual deposit than to provide you with a proper demo trading service. Once you get your demo and start trading they hope that when the demo runs out you will make a deposit in order to keep on trading. One website, BinaryOptionsDemo.com, has a free demo service available for anyone but it is time limited. The platform is based on the Stockpair platform and is actually an affiliate marketing campaign aimed at getting you to deposit with that broker.
In the end, at least until a high quality demo trading platform arrives, it may be better to simply do it the old fashioned way and paper trade. Of course with the advent of computers we can do it much more simply. I use Java charts and they allow me tools that I can use to mark entry and label my chosen expiration. Similar tools exist on the MetaTrader platform as well. Whenever you see a signal, mark it and label your expiry. This is not going to mimic trading in exactly the way as a demo account but you can do it without having to register or deposit with a broker. I’m not trying to say that all demo accounts are shady, just that some are. You need to be fully aware of what you are getting into and be sure to read the terms and conditions before making your deposit. No matter what the account rep leads you to believe there are likely going to be time limits, money limits and trading requirements associated with your demo that will make withdrawing a pain at the very least.