A demo account is simply a practice account that will allow you to trade binary options risk-free. There are two different types – one which will allow you to trade within a specific demo designed platform, the other which will allow you to trade within the exact same platform as other traders. The type of demo that is provided will be at the discretion of the individual broker. Note that not all brokers provide these accounts, so don’t be surprised when you encounter a broker that does not.
When trading with a full demo account, you should be able to test out all of the trade types. The only real difference would be that the investment funds are only practice funds and not actual money. Any money that you earn will not be yours to keep, just like any money that you lose will not come out of your pocket. This provides you with the opportunity to learn how to trade binary options risk-free, with no real concern over profits and losses. This is not to say that you should not pay attention to these things, only that no actual money will exchange hands.
There are different ways to go about opening a demo account. Most brokers do ask that some actual show of interest be seen before providing a demo account to traders. Typically, this is in the form of asking for a deposit. This does not mean that you would need to trade with these funds, only that the account would need to be funded prior to being supplied with a demo account. Should you decide that you do not wish to trade after all, 100% of the deposited funds should be available for withdrawal immediately.
Since binary options brokers do provide demo accounts to those who they hope will decide to stay and trade within their platform, these accounts are generally limited to a certain dollar amount or time frame. For example, you may be provided with $5,000 in mock funds and once those funds are gone the demo ends. You could also be provided with unlimited funds, along with a specified number of days to practice. Either way, the rules surrounding the use of a demo account should be made known upfront.
Some binary options brokers advertise their demo accounts, others do not. You may need to contact the broker to find out whether or not this type of account is available. In the case of binary options plataform, all Silver Level account holders are provided the option to trade with a demo as soon as their account has been funded. This account is provided with no obligation to trade within the platform (non-demo format) and any funds deposited are available for withdrawal at any time so long as they have not been used in actual trades.
Why the need for a deposit before trading demo? With the increased popularity of binary options has come a larger number of traders who just use demo accounts to practice strategies and test out trade signals. In all fairness to brokers who wish to expend all of their time and energy on serious clients, only those who truly want to test out the platform should request to use a demo account.