With binary options becoming such a popular way of investing, it is no wonder people are switching over to this form of investment. It is a much simpler way of investing and it doesn’t come loaded with the stresses you’ll have to deal with when going the traditional route. You can say goodbye to those days where you have to keep a constant watchful eye out for any drops or rises in the market. Binary options offer you a platform to make the prediction before buying the stock.
In retrospect, this may look like a dodge deal – who places a prediction before they know the outcome? It might just as well be gambling, you say! Wrong. Yes, given the fact that it takes chance and probability during the first few tries, investors get the hang of it quicker than people might think. A tool that really helps in this aspect is what’s called a demo account. This account allows you to practice the binary stock market using virtual money before investing your own.
This doesn’t mean that everything you know and learned about investing and the stock markets have been deemed null and void. You still need to have a good idea of where you’re going with this and you’ll need to know how to play the market successfully. Even though the demo account helps you a bit in this aspect, not all brokers offer it as an option. One option you may use then is paper trading.
What is paper trading?
This is a very old method of keeping track of the stock, but it seems to be making a comeback. Paper trading is not trading with paper money, but rather using a pen and paper to write down the details of the market and then using that information to plan a strategy.
How does it work?
When you choose the paper trading route the trick is still to keep a keen eye on those stock markets. When the stock of your choice comes up for purchase, don’t purchase it. Rather write down the details of that specific stock option: the underlying asset, account balance, opening price, opening time, expiry time, amount risked and if you would have bought it as a Call or a Put.Once the stock expires write down the same details including the new account opening balance. This will let you see how well your predictability skills are and if you’re ready to play with your real money.
What are the advantages of paper trading?
One of the advantages of paper trading is that it gives you the opportunity to reanalyze your trades without losing any of your own money. It also doesn’t require a fee that you’ll have to play in order to activate your demo account – it’s absolutely free! What’s more is that it doesn’t expire the way a demo account does.