This is a topic that really needs addressing as many beginners are not aware that binary options demo accounts even exist and the benefits they can confer on their trading activities. Simply put a binary options demo account is the same as your live trading account with the difference of the money in that account not being real. A demo account allows you to practice trading without investing any of your own money. So you get the same platform, the same trades but free play money to practice trading with.
Now there seems to be reluctance in the industry to offer these accounts to customers. No brokers offer demo accounts completely free of charge, i.e without the customer needing to set up an account and deposit some money in first. Of the brokers who offer a demo after your first deposit many limit the amount of time you can use this account, some only offering it for 24 hours, some for a few days, a rare few will give you an unlimited demo account upon first deposit. And here’s the thing, of the brokers who will give you an unlimited demo account after you successfully deposit some money into your trading account, well, most of these brokers won’t do it automatically! In other words you need to dig around on your own and be aware of the whole unwritten demo account pull/push situation between customers and brokers.
It sounds ludicrous, I know, and we’ve tried to get to the bottom of the situation but the answers we’ve received are often as confusing as the demo account situation before we even started asking around. Here is a short list of excuses we have received regarding why brokers don’t offer reasonable demo accounts, or why they don’t go out of their way to publicise the fact if they do.
-They would clog up the servers, if every trader was using one, this would compromise the real trading activity of other traders.
- They breed a false sense of security due to the play money not coming with the same risks as investing your own capital in a position.
- They are too similar to online gambling play money agreements and binary options brokers are very keen to distance themselves from the world of online gambling. In trading there are no practice runs.
-They would cut into profits because more beginners would use them as educational tools rather than losing their money on the live platform while learning how to trade.
Okay the last one is not exactly an official answer by any of the brokers we’ve surveyed but it’s pretty much the bottom line, isn’t it? For the previous three explanations read the fourth, basically.
I’d respond to those other excuses by saying:
-If demo accounts would clog the servers then, wait for it.... BUY MORE SERVERS. You make enough money to keep your demo and live platforms separate, don’t you?
-Granted demo accounts may breed a false sense of security, however, the security they may breed is offset by the value of having such a powerful educational tool at your disposal, and not just for beginners, even experienced traders can make use of demo accounts by practicing with new strategies, assets and risk management styles. And since when were you so concerned about traders losing their money to you?
-Re the gambling connection, gimme a break would you? You offer bonuses don’t you? Hmm, yeah, those little Trojan “gifts” which cause risk capital to be locked up until unrealistic trade volume/wagering requirements are met. Yeah, that’s a hell of a lot more like online gambling than running a free demo account policy. Silly.
So that answers that.
In addition to all this, there are another group of even more unscrupulous brokers who have no intention whatsoever of offering you a demo account of any sort, and yet when you search Google for binary options demo they pop up, seemingly offering you free demos, but what they’re really offering is a video demonstration! Yeah, well cheeky, I know. I think it’s safe to say that you can move on once you find a broker willing to play these kinds of tricks to get you to their homepage.
Now as far as the legitimate binary options industry goes, the current state of affairs regarding demo accounts is not set in stone. Binary options brokers need to recognise that they are doing their customers a disservice by failing to provide them with proper demo accounts. They are also demonstrating a distinct lack of faith in the product by not offering it for free without a deposit. I don’t know about you, but a free try on a binary platform before I deposit any money would be the best incentive going, for me at least, to actually invest my money for the chance of reaping some profits. I think binary trading is its own best promotion and its time binary options brokers recognised this fact.
The bottom line, which no broker will come out and say, is that if you give these accounts out for free then you have no way of managing the leads they generate. When customers deposit fund into a trader’s account in order to get the demo account thrown in, they are already half way towards being converted as regular customers. They’ve given you money after all. Now, if you gave that account out for free, limited or unlimited, you end up with thousands of contact details, several times more than if you require a deposit, and your salespeople have no way of knowing which ones are ripe for the picking and which just signed up for a goof. You’d need ten times the staff members to pursue the extra leads. This is why deposits are required. So it has nothing to do with the product, the industry, the experience of the customer, nope, it’s purely a sales related problem and that is why it is the way it is.
As I said, nothing is set in stone, the reasons for not providing demo accounts, except perhaps the last one (which could be worked around), are by and large spurious. It’s up to you to decide with your clicks, who is and who isn’t worth of your valuable visit to their page. You are the customer, you are right, you have the power. Things will only change when you begin to demand they do. I think it’s safe to say that the industry has gotten to a point where if a binary broker doesn’t offer you a demo account at all, or tries to impose a limit on its use that you should look elsewhere. Let’s fight this battle first, then we’ll address the free demo account before deposit business. Fight the power. Peace.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.