The basic binary options trade requires only a few steps for execution within a trading platform. This trade type requires a few decisions to be made, with the key decision being whether or not you feel that the price of a specific asset is going to move higher or lower in the near future. The […]
How To Select Expiry Times
Each binary options trade requires only a few decisions to be made. One of these is the selection of an expiry time. This will be the time at which the purchases position closes. The price of the asset at the time the trade ends will be used to determine whether or not you have earned a profit. Selection of the most optimal expiration time is critical to your success. Fortunately, there are several ways in which to ensure that you’ve made the best possible choices.
Let’s start by considering the expiry times that are available to you. The exact availability will depend on the broker you have chosen. In most cases, there are short, mid-range, and long-term time periods available. The short group may consist of extremely minimal period of 30-seconds to 5-minutes. The mid-range group may contain expiries of between 10-minutes and 1-hour. All others are likely grouped into long-term, which can last as long as an entire year. What is most important is that you have access to many different periods to choose from.
In general, long-term trades present to most challenge, as it can be difficult to know where an asset price is going to be positioned well into the future. Only select these positions when you have closely analyzed price movement over a longer period of time and have been able to detect a distinct trend that you expect to continue. When they are steady, long-term price trends are just as easy to detect as short. Just make sure that you have validation of the movement before selecting an extended expiry.
Mid-range time periods are easier to work with and tend to be the favorite of most who trade binary options. These periods often pair well with the release of economic data, which can impact the market for a shorter period of time. They also pair well with the release of company-specific financial data, such as quarterly earnings reports. Mid-range time-frames are easy to evaluate withing technical price charts. They are long enough to help prevent missing out on key times to enter the market, but short enough to not keep your funds tied up for extended period of time.
Plenty of debate goes on in regard to whether or not to use super-short expiry periods. These are often linked to their own instrument type, usually referred to as 60 Seconds (although they may not be limited only to one minute trades). The only true possible downside is the fact that fast losses can occur when firing off several of these trades within a short time-frame. But on the flip-side, several fast profits can also occur. The best time to “rapid fire trade” is when a strong price trend is in place. They can also be excellent when a price is spiking for a short time.
It is possible that you will develop a preference for one expiry time over others. There is no real harm in this, especially if you have mastered the process of analysis for that specific period. Do, however, not completely rule out the use of other expiration times. The nature of this form of trading, as well as others, necessitates the willingness to be flexible. It also requires that you not force trades when conditions are not optimal for trading. It’s is wise to not box yourself into a corner when formulating your investment strategies.
The bottom line is that analysis should be what is used to determine which expiry time is best. Often, it is quite easy to correctly estimate the future direction of asset price movement. Determining just how long that type of price action is going to last is another story. New traders take heart – actual experience will make it easier to know which selection to make. The same as most tasks, binary options trading becomes faster and easier with time. You can continue reading our How To articles right here.