Trading Simulator Strategy for Binary Options
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Trading Simulator Explained
Let me start off with a question to get your minds thinking. Would you ever step into a game you just learned about and bet all of your hard earned money on winning the game? I don’t think so, maybe if you are a gambler. The rest of us would choose to avoid any unnecessary risk by learning all the ins and outs of the game before we bet any money on it, right? Why would trading Binary Options or anything else for that matter be any different than the example I just mentioned? Why should you take the risk of losing real money when learning how to trade? I realize that the vast majority of people would want to start profiting immediately because of the thought of all the stuff that they can do with the money. Trading, after all, looks like an easy way to make some cash. If you have been in the game for a while, you know beyond a shadow of a doubt that this is not the situation. I mean on the off chance that you have the cash to burn and play around for the rush of it, go right ahead, however for the other individuals – there is a better way! Welcome to the world of Trading Simulators. It is a standout among the most, if not THE most powerful tool to have if you are a seasoned trader or just thinking about a career in trading. These demo trading simulators accelerate the steep learning curve of becoming that expert trader that everybody is taking a stab at.

What Exactly Are Trading Simulators

Trading Simulators are also known as paper trading or virtual trading. It can be compared to a free binary options account, just much better in my opinion. They are extremely useful for you as a trader, because you can
  • practice trading stress-free,
  • try out new trading strategies,
  • improve on your current strategies,
  • learn to trade volatility,
  • refine your technique and approach,
  • gain experience,
  • become confident,
  • make all the mistakes in the world and
  • acquire new facets of the market without any cost.
It is regularly said that 95% of all traders lose their trading capital within the first year. What makes a trader successful then? In interviews, the best traders in history always emphasize the importance of backtesting. Backtesting means to use historical price data of a particular market to find out how well a trading strategy would have worked. While there is no guarantee, the chances are that a successful strategy in the past will very often generate profits in the future. Trading Simulators essentially lets you back test your trading strategies and also enables you to take demo trades during live market conditions.

How Can I Apply This To My Trading

There is truly no viable alternative for experience and screen time with regards to trading Binary Options or the Forex market. Traders that have spent endless of hours trading a live market will have developed a feeling for the market that is almost impossible to explain. These traders will be able to distinguish between good and bad trading setups by simply recognizing similar price action to what they have seen before. Should you have this type of experience, you will know exactly what I am talking about. Attempting to trade a live market is altogether different from looking back at charts or backtesting a trading strategy. Backtesting a strategy makes it easy to see in hindsight which signals would have worked and which not without any stress involved. When you are trading real-time markets, you can’t see what is coming next, and you start to wonder if it is a valid signal. You will be contemplating whether or not to take the trade. This is where uncertainty begins to set in. Trading with real money causes traders to be naturally under stress because you need to make quick trading decisions. The only way to combat this feeling of anxiety is when you have enough experience under your belt. Trading Simulators are created to help traders develop this type of experience and confidence through taking trades on historical and live market conditions. This practice will help them make trading decisions become like second nature to them. This is an important plus point because it trains them not to overthink the trade, but simply act when they have to. This is precisely how you ought to trade, verging on like a machine with no feelings. It is vital to stay in practice of taking trades on a daily basis otherwise you will lose this ability to act without any fear. There is a perfect saying that speaks to this statement – “Use it or lose it!”

Metatrader indicator for Trading Simulator

As always, MetaBinaryOptions is offering you a free Metatrader indicator for helping you apply this strategy.

Click here to download the indicator 100% free

This indicator will automatically place the Trading Simulator on your chart. Make sure to put the file in the "MQL4/Indicators" folder. "Allow DLL imports" in Tools/Options/Expert Advisors before using the indicator.

metrader-mt4-binary-options-simulator

Figure 1 – Binary Options trading simulator for mt4

How To Use The Trading Simulator

When you add the Trading Simulator to your chart, you will get an option to select how much your starting capital must be. You can also choose what percentage payouts you should get. After doing this, you will see a window pop up on your right-hand side. Here you can choose the expiry time, the amount that you want to risk and then when you get a trade you can just click the up or down button. This mt4 indicator will keep track of all your trades – how many winners, losers and ties you have. The Binary Options Simulator will also calculate your winning percentage. When you take your call or put trade, you will see it show up in the right-hand column. The trade will show you your entry price, the current market price, how many seconds is left till expiry and what the payout will be after expiry. The other helpful thing the Metatrader Simulator does is it shows you on the chart where you took the trade and where it expired.

metrader-mt4-binary-options-free-demo

Figure 2 – The simulator works just like a binary options demo account

Do not start to panic when you see the trades disappear on your right-hand side. This is only done to make space for new trades. Notice that after closing the simulator, all trading results are saved in a “csv” file under Data Folder/MQL4/Files when doing live trading or under Data Folder/tester/files when running the Strategy Tester.

When using the Trading Simulator you can combine it with our other MBO MT4 indicators like Market Sessions or News Calendar indicator. This feature is very helpful because most people tend to avoid trading during news releases and only like to trade during specific trading sessions. Every trader should consider these facts when trading Binary Options. In the below image (figure 3), you can see that we have added the News Calendar and Market Sessions indicator with our Trading Simulator.

metrader-mt4-binary-options-news-backtest

Figure 3 – The simulator can work along with other indicators like the news calendar and market sessions indicators.

The Binary Options Trading Simulator can also be used to backtest different trading strategies or indicators by making use of the strategy tester on your Metatrader 4. We have found that this function is particularly useful for those traders who are unable to practice during regular market hours. Using the strategy tester enables you to trade a few weeks’ worth of data in just a few hours. The ability to trade even when the markets are close, at any time of the day or night makes our Trading Simulator a highly valuable and useful tool.

binary-options-metatrader-mt4-strategy-tester

Figure 4 – The mt4 binary options simulator can be used in backtests along with historical news data

Success depends on hard facts, and that is exactly what this Binary Options Simulator will give you. You will quickly find out whether your strategy is profitable or not. This will help you in two ways. Number one being that in the event that your strategy was to be unsuccessful, you can move on and invest your time in the development of a new strategy. Secondly, if your method should be profitable, you can work to improve on it and move on to trade it live as soon as possible.

I must admit that backtesting your strategy is not as real as using real money, but it creates a pretty realistic view of how well you can do with your strategy in the future. I personally think that Trading Simulators are the second best learning aid out there for any trader. Number one would obviously be live trading but that could get quite expensive.

Trading Simulator Summary

Regardless of the fact that you’ve taken hundreds of courses and read a few books on trading, you may not be as prepared as you think you may be. Trading the live markets is vastly different than only discussing it. Using our Trading Simulator, you get the advantage of genuine experience without taking any of the financial risks. The key to using the Trading Simulator to your advantage is to treat it seriously as if the trades were live. Once you’re comfortable utilizing the Trading Simulator, it very well might be time to attempt your strategy with real money. Trading any market requires precision and focus, which can only be developed with practice. You should commit yourself to consistent practice and never give up. “Practice does not make perfect. Perfect practice makes perfect.” – Vince Lombardi
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