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Tips For Choosing Binary Options Expiry
How To Get A Base Line Expiry
I learned a long time ago how to judge the duration of a given signal, well before I began trading binary options. The method I will describe is just as effective, even more so in some regards, for binary trading as it is for standard equity options. The first thing to do is to identify what your signal is. Is it a trend line bounce, a stochastic crossover, a shift in momentum, a candlestick pattern or a variety of signals as if the case with most profitable strategies today. Then, you go back over your charts for a given period and identify all the signals. It doesn’t matter what time frame you are using, this technique works in all. Once you identify your signals mark the strong signals and weak signals and then count how many bars or candles it takes for each signal to move into the money.
Once that is done you can take an average of the number of bars needed for the strong and for the weak signals to move into the money. These averages are now your base line expiry for you signal. If you are using a chart of hourly prices and your signal takes an average of 3.7 candles to move into the money you will want to use an expiry that coincides with that time. This could be a mid day, end of day, 4 hour or other option with an expiry that matches your signal horizon. If the signals takes 3.7 candles and you are using a daily chart that means 3.7 days, if the hourly chart 3.7 hours.
Let’s look at the chart below. I am going to use a basic moving average strategy to illustrate my point. I will use the 30 bar exponential moving average because it hugs prices closer than a simple moving average and will give us more signals to count. Also, in order to weed out bad signals and to, hopefully, improve results, I am only choosing the bullish trend following signals. So, there are 15 total signals; 6 weaker signals and 9 stronger signals. On average, it takes 4.2 bars for these signals to move into the money and PEAK OUT. That means, since this is an hourly chart, that each signal will move into profitability and reach the peak of that movement in about 4 hours. So for expiry I would want to choose the closest expiry to 4 hours that is available. If a good choice is not available then no trade can be comfortably made. Breaking it down a little the weak signals peak out in about 2.6 hours versus the stronger signals which take about 5.3 hours. Putting this knowledge in perspective, a weaker signal might be one that is close to resistance. A stronger signal might be one that is not close to resistance. Also, a stronger signal might be one where price action makes a long white candle and definitive move above or from the moving average whereas a weaker one might only create small candles and spinning tops.
Measuring signals to choose expiry
Additional Tips For Choosing Binary Options Expiry
Choosing expiry is one of the most important factors in making a trade. The other most important factor being direction. All too often I get asked questions about why a trade went bad in the final moments and one of the most common areas of error I find is in choosing expiry. Of course there are the errors in analysis that result in counter trend trading, the random bits of news that can reverse a market in a heartbeat and many other reasons why a trade can go bad but the focus of this discussion is expiry. It is obvious that you don’t want to use 60 second expiry when trading on weekly charts and you won’t want to use end of day expiry when trading off the 60 second charts but just how do you determine what the best expiry will be?
One question you must ask yourself is if you are trading with or against the trend. When trading against the trend I would suggest a shorter expiry than a longer one simply because there is less chance of an extended move counter to the trend; your expiry must be more precise. When you trade with the trend your expiry can be a little farther out. A trend following trade has a higher likelihood of closing in the money so don’t need to be as precise. A signal that follows the trend is a lot more likely to be in the money an hour, a day, a week or a month from now than one that goes against the trend.
Another factor that can have a big impact on which expiry is best for a given trade is support and resistance. The relative level of prices to a support or resistance line is a factor in how likely a trade is to move in a given direction. If prices are near a S/R line and moving away there is much more chance of your option closing in the money than if prices are near a S/R line and moving toward it. When prices are moving toward one of these lines the chances of the movement being halted and/or reversed is much higher than when prices are moving away from one. So, how does this apply to expiry? If you are taking a signal that has a higher chance of being halted or reversed then you would want to choose a shorter expiry than if the same signal were not faced with a S/R level. I purposefully did not say call or put, or bullish or bearish, because this applies to both bullish and bearish trading. Also, keep in mind that support and resistance can be in the form of lines drawn at areas of interesting price action or peaks, moving averages, Fibonacci’s, envelopes and bands.
Choosing The Right Binary Options Expiry
The Hardest Part Of Trading Binary Options
Don’t get me wrong, binary options are way easier than trading most other forms of financial instruments. And I’m not talking about the ease of access either. There are many reasons why trading binary is attracting more and more traders, and pulling more and more traders away from other disciplines. The very first thing that makes binary better is account size. You don’t have to have a margin account, and there are no margin calls. The second thing that makes binary options better is risk. There is infinitely less risk to a simple yes or no trade than to one that opens your account to unlimited losses the way that spot positions do. This is why so many forex and commodity speculators have switched. If I haven’t yet convinced you that binary is easier than other forms of trading let me mention delta, theta and implied volatility and I will know that equity traders just got a shiver down their back. So, I’ve established that binary is much easier to trade than other forms of trading but that does not make it easy to do. You still have understand the market, work with a strategy, employ a system and use good judgment. If there is one thing that I can say as definitively being the hardest part of trading binary is choosing your expiry.
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Caught between a rock and hard place.
How To Choose The Right Broker For Your Strategy
This is of course assuming you have found a good broker to trade with, have learned some technical analysis and are disciplined enough to trade responsibly. I have found that no matter which broker, or which platform I trade on that there is very rarely an expiry exactly when I want. This not a fault of the brokers because they, as a whole, try very hard to provide the options and expiry demanded by the market, namely us traders. The very first step in choosing the right expiry is to understand your strategy and how you are trading. If you are a swing trader like me you will definitely need a broker that has at least end of the week expiry if not end of next week, or end of month, or 30 days, or a combination of these. Not all brokers have them. Most brokers are limited to shorter term expiries because binary options are intended for quick, day trader and option scalper, types of trades.
The next step in choosing the right expiry period comes down to the platform and the broker. The first difference in expiry types is long term and short as in end of day versus end of month expiry. The next difference in expiry types is how expiry is determined relative to time of purchase. Is expiry set at some future time or date or is it a set time from the time of purchase. Let me explain. An end of month expiry is 30 days, at first. And then it is 29 days, and then 20 days, and then 5 days and then one hour all the way down until the time expiry. The amount of expiry depends on how much of that time is left when you buy into your position. If I buy and end of month position on the 1 st , I have roughly 30 days. If I buy it on the 25 th I have 5 or 6 days. I can’t tell you how many times I screwed myself up with that mistake. This is also true of short term expiry. An end of the day expiry has 6 or 7 hours of expiry at the start of trading, but less and less as the day wears on so it is important to keep this in mind.
Expiry set from time of purchase is much better in my opinion but choosing your broker based on expiry comes down to a variety of factors, not just this one. This is how 1 hour, 60 second, 1 week, 30 day and 1 month options are set expire, along with many other choices (depending on the broker). This means that the options expires a set amount of time after the option is purchased. I’m sure the most well known example is 60 second options, options that expire 60 seconds from time of purchase. I like this better because if I want to trade 30 days I can, and am not hindered by the calendar. It just provides a lot more flexibility.
Choosing The Right Expiry For Your Strategy
Understanding your strategy is what ties all of this together. Your strategy dictates what kind of expiry you will need. If you are trading day signals with expiry before the end of the day you obviously don’t longer term expiry and vice versa. However, both kinds of traders can use the same tricks to pinpoint expiry times. They do it by measuring their charts. This is one of the most useful tips I can give to a technician. Go back and measure your charts, measure every rally, every decline, every correction, every trading range until you get a feeling for how your chosen asset moves. It doesn’t matter if you are using 1 day charts, 1 week charts, 5 year charts, hourly, daily or weekly candles. In fact, I suggest measuring your chart in different time frames. Then go back and find all the signals you would want to trade on and measure them. Measure how many candlesticks it takes for the asset to move into the money once your signal has fires. Then average them all together. Then use that figure to pick your expiry, just make sure it can be employed on the platform you are trading. Here are a couple of links to more in depth articles I have written about chart patterns and choosing the right expiry.
60 Seconds? 1 Hour? 30 Minutes? Choosing The Right Binary Options Expiry
After choosing high or low, picking the right expiry is the hardest thing for traders to decide. Several factors can impact which expiry is the right one. Failure to pick the right one can often mean the difference between an option closing in or out of the money.
How to Choose the Right Binary Options Expiry?
Like many of the brokers like to point out, binary options are a simplified form of trading. I want to point out that just because they are simplified they are not simple and certainly not easy to trade. Successfully at least. It is super easy to open and account, send some money and place a trade. The hard part is actually trading correctly and being profitable. The most important aspect of the trade is choosing the right direction, whether or not an asset is moving up or down is the most basic aspect of binary trading. The hard part is knowing when, how high and how long an asset will move. All too often I place a trade and watch it move into the money for a while and then right back out, resulting in a loss. If you are like me this is super frustrating and also the reason why it’s important to choose the right expiry.
First off let’s talk about what expiry is. The basic definition is that it is the amount of time until a binary option expires, or the time at which a binary option expires, depending on which broker you are using. I know this may sound confusing but remember, not all brokers list their expiry in the same way. The thing to remember is that the option you buy must be higher or lower at expiry (depending on whether it’s a call or a put) than the price you purchased, in order for the trade to make a profit. If it isn’t, then you lose even if the option was in the money at any time before the expiration so choosing right is of the utmost importance.
Some brokers give a list of set times at which the option expires such as 10:45, 11:00, 1:30 or maybe something like the end of the day, end of tomorrow or end of the week. If it is 10:00 AM and expiry is listed as I’ve described the 10:45 expiry is 45 minutes, the 11:00 is 1 hour and the 1:30 is 3.5 hours. If the time at which you place the trade is 1:15 then time to expiry at 1:30 is only 15 minutes.
Other brokers may list fixed expiries like this; 30 seconds, 1 minute, 5 minutes, 10 minutes, 30 minutes or 1 hour. This means that there will be that much time between the time at which you buy the option and the time it expires, no matter when it is you buy. For example, if it is 10:36 AM and you buy a 1-hour option it will expire at 11:36 AM. If you buy the 5-minute expiry the option will expire at 10:41 AM. The best brokers will have a mix of both types of expiry.
Factors Affecting Expiry Choices
There are a couple of things that can affect which expiry you choose, along with your strategy. Some strategies are intended for very short term market moves and may recommend using very short expiry, other strategies are intended to identify much longer market moves and may need more expiry.
Choosing the right time frame may be the most important factor when choosing expiry. The time frame refers to the chart length or perspective you are trading. Longer time frames equal longer expiries, short time frames equal shorter expiries. If you are trading on a chart of 1-minute using an expiry of the end of the week is not appropriate any more than using 1 minute or 5-minute expiry while trading off of the one hour, 4 hour or daily charts.
Think about it like this; If we assume that it may take 2-4 bars for a signal to produce a profitable market movement then we need to allow enough expiry for that many bars to form on the chart. As a rule of thumb, any signal taken on the chart of weekly prices gets at least a week or two until expiration. This is because it may take a week or more for the signal to develop into an actual price movement. When I take a signal on the daily chart, expiry ranges from a few days to a week. Moving down to the chart of hourly prices I also move down in length of expiry. In this time frame, my chosen expiry will range from an hour or two up until the end of the day, depending on when the signal is taken. If I trade off the one-minute charts an expiry of 60 seconds to 5 minutes is appropriate.
Key Elements That Can Influence Expiry
Support and resistance levels are all crucially important and you have to keep a close eye on them when choosing the right binary options expiry the pros’ way. These levels are a proven technique for finding areas where the market may be temporarily halted or even reversed. If an asset is trading too close to one, it may seriously impact the reliability of any given signal. For example, an asset is trending up on the hourly charts and you receive a strong stochastic signal. Ordinarily, a one-hour expiry would be more than enough for this trade but at this time the asset is trading very close to a long term resistance line. The asset moves up but is halted at the resistance line and then moves lower, leaving your trade out of the money.
Trading news is another big influence on the market and something that many traders will tell you to avoid. It is not uncommon for news to come out of the blue or to surprise traders by being better or worse than expected and send the markets careening off in the opposite direction from where a signal may be indicating.
Sometimes news that’s in line with market expectations, is not enough to keep the market moving in the same direction as expected. It’s a good idea to keep up with news events that have the potential to move the asset you are trading. Major economic events, earnings, and politics are three things all traders should be keeping up with anyway. Often time major market moves will converge with an event, the monthly FOMC meeting is one I have noticed, that is often at a critical turning point for the markets.
Your indicators also have a big influence on which expiry to choose. Convergences and divergences can occur in any time frame or even between time frames. A convergence is when price action and two or more indicators or time frames are in agreement, producing the same signal at the same time. This is a stronger signal than when only one indicator or time frame is producing a signal. A divergence is when price action and the indicators are not in agreement. Divergences are often used by contrarian traders as a signal to trade opposite the underlying trend. When I spot a convergence I know I can use a shorter amount of expiry because the signal is stronger and more likely to happen sooner. When I spot divergences I am extremely cautious, will look for reversals and may even choose not to trade.
Know Your Charts
Knowing your binary options charts is key to successful expiry choices. When I first started charting I learned to measure each and every rally, each and every pullback or correction and each and every bear market. I learned to keep these measurements in a table and to use the averages as a means of determining expiration times. Now, when I first got started trading I was trading equity options but the work I did then is just as useful in binary trading now as it was then. From my tables, which now include years of data, I know what the average length of a short term rally in a bear market is, I know how many short term rallies to expect in a long term bull market and how long each of them is likely to last. I know that when I receive a strong signal on the hourly charts of the S&P 500 that it will move into the money within 3 bars and lead to a rally lasting an average of 17.8 bars so when I choose my expiry it needs to be long enough for the signal to develop but not longer than 17.8..
How to Select a Binary Options Expiry – Video Lesson!
My Last Words On Choosing Expiry
Choosing the right expiry can be a daunting and frustrating task for a newbie but it is not impossible. The best thing I can recommend for newbies is to choose a single asset, maybe two, and become very familiar with them, their charts and the time frame you wish to trade-in. Keep on reading to find out how our other in-house traders and writers are approaching their expiries.
Bogdan – Expiry Is It? Huge Problem, Help Me!
What is the best expiry time? This question is on everyone’s lips ever since binary options trading begun. The reason why people are so eager to find an answer is that knowing it would mean you found the Holy Grail of Binary Options. Why is expiry time the Holy Grail? Well, because with the right expiry almost any trade can be In The Money, even if you close your eyes and click on Call or Put, it doesn’t really matter which one. So do you want the answer to the million-dollar question? Yea? Good – keep reading.
My Motorcycle and Another Guy’s Speedometer
Ah, but I cannot give you the answer straight away and since I love telling stories, you’ll have to read one of mine before finally receiving the Holy Grail of Binary Options, so here we go: I love my motorcycle – as probably every motorcycle owner does – I love riding and I love talking about motorcycles. What I don’t like is a certain question that usually comes from newbies… maybe that’s the wrong wording; it’s not that I don’t like this question, but I don’t know really how to answer it in a manner that will satisfy the guy who’s asking it. Here it is: How fast should I drive? Well, I know exactly how fast I should drive, but I cannot tell others how fast they should drive. I cannot give them a number on the speedometer because there is only one correct answer: You should adapt your speed to road conditions.
However, this answer doesn’t satisfy the newbie who thinks I have to give him an exact number… the Holy Grail of motorcycle riding. If I tell him he should drive at a speed of 20 km/h, that’s correct, if I tell him he should drive at 120 km/h, that’s also correct. If you are passing by a school, drive at 20 km/h or even slower; if you are on the highway, drive at 120 km/h. But also 15 km/h and 90 km/h are correct. Then again, if you are driving on a country road, maybe you should use 30 km/h, or 40, or even 10 if there’s gravel and the road requires you to. If you are driving on a wet road, slippery road, at night, on a road with twists and bends, in low visibility conditions, the answer to the question “How fast should I drive?” changes. And now you’re thinking you had enough about motorcycles and you want to get to the part of the binary option. Well actually friends, I’ve been talking about binaries all along. Yea, I know only some of you understood so this is for everyone who didn’t get it: the speed at which you should drive your motorcycle is actually the expiry time you should use. Please don’t take it literally and don’t use the numbers above for expiry.
The thing is that just how you should adapt the speed of a vehicle to road conditions, you should adapt your expiry time to market conditions. The possibilities are almost endless but here are some likely scenarios: If I am trading in a fast market I can use a 2 candle expiry or even one candle (depends on how fast the market is moving). If I am trading news, then I use an ultra-fast expiry of 1 or max 2 candles on a 1-minute chart. If I am trading in a sluggish market then I can go up to 12 – 24 candles, depending on how the chart looks. If I am trading a bounce off of an S/R (support/resistance) level, then I can use a short expiry time of fewer than 3 candles. If I trade a break of an S/R level then I can use an expiry of up to 24 candles because the price could return to retest the recently broken level.
If I am trading in the direction of the main trend which has been going for quite a while (yes, of course “quite a while” is relative) and regular divergence is present then I will probably use a short expiry time of 3 – 5 candles because the divergence could cause the trend to reverse so I want to be out quickly. If I am trading in the direction of a trend that has just begun I will use a longer expiry (12 – 24 candles) because a retracement might be coming up and I want my trade to “survive” that potential retracement. If I am trading after a retracement but in the direction of the trend, I can use a relatively short expiry of up to 5 candles. If I am trading a reversal I can use either a short expiry of 2 candles or a long one of at least 24 because the price might make another top/bottom before finally reversing… it all depends on the situation and actually I might totally disregard all numbers above if the market requires it.
Here’s My Question to you
It all comes down to how well you can read market conditions. Do you know when the market is ranging or when it is about to start ranging? Do you know what tested S/R is? Do you know what potential S/R is? Do you know how to recognize major support and resistance as opposed to minor support and resistance? Do you know how to make the difference between a trend and a single impulse of the market? Do you know when a trend is relatively overextended? Can you make the difference between a real break and a fake one? Of course, some of the things above cannot be predicted with 100% accuracy but if overall the answer to my string of questions is Yes, then you already know the answer to the million-dollar question “What expiry time should I use”: You should adapt your speed to road conditions. If your answer is No, then I cannot answer the said question in a manner that will satisfy you.
Okane – My Guide to Picking Profitable Binary Options Expiry
Choosing the correct expiry is a struggle each trader faces on a daily basis. After all, we are trying to set an expiration date on something that will… or rather might occur in the future. It is needless to say that forecasting the future is challenging. Every trader has their own method for setting the best possible expiry. Their analysis is based on various things, such as experience, different indicators, and time frames. I can’t say whether one method is better than the other but what works for me could work for you as well – with some practice of course! Before we begin, I want to describe my trading. I am a short term trader so I focus on making trades with 10 minutes up to 30 minutes until expiry. To do this I use charts as low 5M or lower and focus on the heavily traded forex pairs.
How I Pick My Expiries – The 3 Steps
The first step in choosing the best possible expiry is getting to know the asset you wish to trade. Highly volatile assets often need less time to move in the desired direction than a low volatility asset. Hence, an asset’s volatility provides good information on how much time each trade requires. You can study volatility by measuring the lengths of the candlesticks, among other things. Huge candles indicate that volatility is high. Most major currency pairs are volatile in short time frames and perfect for day traders like me. You can learn more about volatility in binary options in the school section.
In the next and very important step, you should carefully analyze all time frames. I always start with the highest time frame available and work my way down. The goal is to identify areas where it is more likely that buyers or sellers will get into action and move the price! This is also known as support and resistance. This information is helpful for approximating how much time your trade needs by the time frame in which the support or resistance exists. Higher time frame support or resistance will need a longer amount of expiry. I mentioned before, you can’t predict with certainty what will happen in the future, but history often repeats itself. For this reason, you will have some idea about how much the buyers and sellers will move price, by how many pips and how fast.
My third step involves the clock and it is crucial when it comes to choosing my expiries. Before I understood how to use the time to my advantage I would often find my trades going against me right from the start, or going OTM with just minutes left till expiry. This is because forex pairs often behave according to a pattern determined by the clock. To find a significant time pattern you need to observe an asset over a period of time and mark significant times such as market openings or closings. It is fully possible to backtest this by going through different time frames and locating areas where price action changed direction or created a retracement in synch with this pattern. What I do is count and analyze the candles in these areas to learn how much time would’ve been needed for a trade to finish in the money and use that to help predict my expiry in the future.
Put it All in Action!
Allow me to summarize my 3 step method for choosing an expiry.
Step 1: Familiarize yourself with your favorite asset and learn how volatile it is by measuring candlestick lengths and the speed at which price moves. Use this to get an idea how much you can expect it to move each day in the future.
Step 2: Analyze all time frames to find key areas where buyers or sellers have challenged the price. Count the number of candles prices moves each time it bounces from support or resistance.
Step 3: Backtest and find out how market time tables affect price movement and use those to predict future movements.
One Expiry to Rule them All
I choose to let the “market makers”, the buyers and sellers, show me their expiries instead of guessing or using my indicators. The idea is to allow my strategy to adapt to the market and not the other way around. I’d like to say that there is one expiry to rule them all but you can’t simply can’t choose base on static rules. This is a common newbie mistake that will have devastating effects on your balance. The price itself is a great indicator, it will tell you what it wants to do, where it wants to go, all you have to listen. Neglect the price and you will be the one who ends up paying. No matter what you do, sometimes your expiry won’t work and that is a part of the game. You just can’t win them all. Luckily though, there are ways to avoid some of the losses. For example; don’t trade during high impact news releases and during times when volatility isn’t acting “normal” (decreasing, stands still or too jumpy).
There you have it guys, a joint effort from our traders/writers, which resulted in an extensive article about choosing the right expiry time. It will get you far but it won’t put money in your pockets, so make sure you do your own part, which is learning and practice. Good luck out there!
Expiry Times Explanation
Expiry times are one of the most important aspects of binary options. Traders who understand how to find the perfect expiry times for their trades will make a lot of money. Traders who lack this skill will end up broke. This article will help you to be on the right side of this line.
In this article, you will learn:
- What Are Expiry Times?
- Why Are Expiries Important?
- Which Expiry Times Do Binaries Use?
- How Do Brokers Use Expiry Times?
- What Is The Difference Between Expiries?
- Can I Change My Expiry After I Trade?
With this information, you will understand everything about binary options and expiry times, and you will be able to use the right expiry times to improve your trading.
What Are Expiry Times?
The expiry times of binary options define the time in which your prediction has to come true. While binary options always use the same term – expiry times – there are two different types of expiries. Those are:
- Confirmation expiries. These expiries define the time by which your broker will compare your prediction to the actual market performance. High/low options and ladder options use this type of expiry. If you invested in a high option with an expiry of one hour, for example, your broker will wait an hour and then check your prediction. If the market trades higher than when you invested, you win your option. If it trades lower, you lose your option.
- Deadline expiries. These expiries define a deadline by which your prediction has to come true. One touch options and boundary options use this type of expiry. If you invest in a one touch option with an expiry of one hour, for example, the market has one hour to reach the target price. If it touches the target price at any time within this hour, you immediately win your option. If it fails to touch the target price, you lose your option.
The whole process is simple. With confirmation expiries, you predict where the market will be at a specific point in time. With deadline expiries, you predict that the market will do something within a time span.
Bot predictions are similar but different. Some traders might do better with the one type than the other. We recommend to try a few different strategies and find out for yourself which trading style you like best.
Why Are Expiries Important?
Expiry times are the most important part of trading binary options. Assume that you are investing in a high option, for example. The underlying asset will eventually trader higher than now. Predicting that the market will rise is not the difficult part. The difficult part is predicting when it will rise. It might start immediately, and it might take a little while.
When you invest in a high option, the difference between winning and losing the trade is the expiry time you use. With an expiry of 30 minutes, you might win the trade, but win an expiry of 60 minutes, you might lose it.
Traders have long neglected to study expiry times. They believed that if an asset rises, any expiry will win them the trade. This is not true. The market rarely moves in a straight line; it moves in trends that take two steps forward and one step back. When you invest in rising prices during an uptrend, you might still lose your trade if you choose the wrong expiry time and run into the one step back. Similarly, some traders might use an expiry that is too long, which would mean that the current trend is over by the time their option expires.
When you trade options with a deadline expiry, for example a one touch option, expiries are important, too. To win a one touch option, the market has to touch the options target price. Longer expiry times use target prices that are further away from the current market price than shorter expiry times. It is important to give the market enough time but also keep the target price close. Experience will help you find the right mix.
Pay attention to the expiry you choose, and you should be able to avoid these problems. By reading this article, you have already taken the first step.
Which Expiry Times Do Binaries Use?
The unique advantage of binary options is the shortness of its expiry times. Banks have long offered assets that allowed for payouts of 70 to 80 percent on predictions about an asset’s price, but these assets have used expiry times of months and years. With binary options, you can make the same profit in a fraction of the time.
There are three types of expiry times for binary options:
- Ultra-short expiry times. These expiries range from 30 seconds to 300 seconds. They are only available for a special type of asset – 60 seconds options. With these expiry times, you enter the market and get out of it within less than five minutes.
- Short to medium expiry times. These expiries range from 5 minutes to a few hours. Typical examples are 5 minutes, 15 minutes, 30 minutes, 1 hour, 2 hours, and 4 hours. They are available for all binary options types.
- Long-term expiry times. These expiries allow you to trade long-term predictions and range from a few days to weeks, months, and years. Most brokers offer them as a special type of asset – long-term options. Usually, they are only available for high/low options.
While all brokers offer short to medium brokers, not all brokers offer ultra-short and long-term expiry times. Some brokers try to offer a little bit of everything; some specialize in a special time of expiry. To find the ideal broker for you preferred type of expiry, we recommend taking a look at our broker top list, where we compare the best brokers and their features, making it easy for you to find the broker that offers the expiry times you are looking for.
How Do Brokers Offer Different Expiries?
Binary options allow you to choose your expiry times in two ways:
- You choose the expiry. This is the classic system with which you choose the time until your option expiries. If you select an expiry of 1 hour at 1 PM, for example, your option will expire at 2 PM.
- You choose the expiry time. Some brokers started offering this new system to offer a unique trading style. You directly choose the time at which option expires. Most brokers offer expiry times in steps of 5 or 15 minutes. For example, you could choose to let your option expire at 1 PM, at 1:05 PM, at 1:10 PM, and so on.
Both types of expiries are essentially saying the same thing in a different way. Most traders will do equally well with both systems, but if you have strong feelings in one way or the other, you should check which type of expiry a broker uses before you sign up.
What Is The Difference Between Expiry Times?
On the surface, it might seem like all expiry times are equal. Just pick the one that fits best, right? Unfortunately, things are a little more complicated.
Depending on your expiry, you will have to analyse different time frames, and different time frames require different strategies. For example, it would be a bad idea to trade a binary option with an expiry of 30 seconds with the same strategy that you used for an option with an expiry of 1 year.
To explain this connection, let’s look at the unique challenges of each time frame.
- Long-term binary options are heavily affected by fundamental factors. When you invest in a binary option with an expiry of one year or longer, you have to consider fundamental factors such as economic growth and stability. During the 2008 financial crisis, for example, long-term investors had to invest in falling prices – there was no other way to make money. Technical analysis can help you to find the right timing, but when the economy is collapsing, there is no sense in investing in rising prices. Similarly, an increasing money supply will almost lead to rising prices in the long term.
- Ultra-short-term binary options are completely free of fundamental influences. When you predict what the market will do over the next 30 seconds, economic developments are unimportant. These developments are solely based on the relationship of supply and demand, and technical analysis is the only way to interpret these patterns. Traders of short-term binary options should use strategies based solely on technical analysis.
- Short-term binary options might be influenced by fundamental influences. When you predict what the market will do over the next four hours, it is unlikely that fundamental influences will move the market during this time – but it not impossible. There are many days on which the release of scheduled news will dominate the market. Traders of short-term expiry times have to plan ahead for these releases and make sure that they do not influence their trading.
Your strategy determines the range of expiry times you can use. Before you decide on your strategy, you should, therefore, think about which expiries you would like to trade.
- If you want quick returns and short trades, there is no sense in choosing a strategy that trades fundamental influences such as a country’s foreign trade balance. You have to use a strategy based on technical analysis.
- If you want to invest for the long-term, you must consider fundamental influences. When a central bank floods the market with money, it will cause inflation, and the market will rise, even if the economy stagnates.
Consider these aspects in your trading, and you will be fine.
Can I Change My Expiry After I Trade?
Not so long ago, your expiry time was fixed once you invested. This makes sense because the basic premise of binary options is that you predict what will happen at a specific time. Nonetheless, some brokers have recently started to offer option types with variable expiry times.
These option types work just like a regular high/low option. You choose an expiry time and predict whether the market will trade higher or lower at this point. After you invested, however, you are not forced to sit and watch. You can actively influence what is happening to your trade.
You have three options:
- You can end the trade early. Most brokers continuously offer you a payout that you would get if you end the trade right now. The height of this payout depends on how your trade is doing. If it seems likely that you would win your trade, your broker will offer you more than if you had little hope.
- You can extend the trade. With this option, you can extend your expiry time, often by a factor of two. If you invested in an expiry time of one hour and extend the trade, your new expiry would be two hours. This option is ideal if you would lose a trade at this point but are confident that you will win it later. When the market has just begun to turn in your direction, this option might help you make an easy profit.
- You can double your investment. When a trade is looking like a sure winner, this option helps you to make more money with the same expiry time.
With these options, you are still not completely flexible in choosing your expiry time, but you have a lot of options.
Some traders consider these options unnecessary; some consider them to be the Holy Grail. There is no right or wrong in this question, and you have to decide for yourself whether these options are important to you. To find a broker that offers these options, take a look at our broker list.
Binary options success means managing your expiry times well. You have to choose the right strategy for your expiries and the right expiries for your strategy, and you have to choose the right expiry for the movement in which you invest.
The most important ingredient to finding the right expiry time for your trade is experience. With this guide, you have made a big step in the right direction. Take a look at our comparison of brokers, and you will also find the right broker.
Expiration Time in Binary Options
You will learn about the following concepts
- What is expiration time
- Strike time
- Strike price
- Expiry time alternatives
- Expiry time extension
- Early trade close
- Double Up
Expiration time marks the moment when the binary option expires. It basically determines how long after you’ve placed the trade, you’ll learn the outcome of your bet. Depending on the type of binary options you are trading and, of course, the type of your binary option broker, you may see different expiration times when placing a trade. After you have placed your bet and picked the expiration time, the only thing you can do is to wait for that time to come. When the option expires, the trading platform will assess the value of the asset and determine whether your position is in or out of the money.
Strike Time, Strike Price and Expiry Time Alternatives
There are several other terms that are closely related to expiration time. For example, when a trader places a bet, the hour at which the trade was placed is often referred to as strike time. The exact price of the asset at the execution time of a certain trade is called strike price.
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At this moment, the trader is supposed to predict both the direction of the assets price and pick the expiration time. For example, if the trader thinks that the asset’s price will rise, then they have to select the Call option. Conversely, if they think the price will go down, then they have to execute a put option.
Don’t forget that your broker may offer different expiry times for different types of assets. In most cases brokers will give you the opportunity to choose between hourly, daily and weekly expiry, but some brokers also offer 60-second options which allow you to quickly execute trades with an expiration time of just one minute.
Expiry time is one of the most important aspects of trade execution. The larger the expiration time, the more likely it is for the asset’s price to drastically change under the influence of market changes. Of course, this doesn’t necessarily mean that shorter expiration times are preferred – this entirely depends on the trader’s trading style and and his/her choice of analysis methods.
Some brokers allow you to extend your expiry time, also known as “rollover”, which is useful when you see that the underlying assets price is moving in the desired direction, but not fast enough, or it is not going well at all. This option will give your position a fighting chance to become “in the money”.
However, you will have a limited time to do so. Brokers typically open up a window lasting around 3-5 minutes to exercise this feature, which is usually shortly before the option expires. Also, you are typically allowed to extend your option only once for its entire duration.
Early trade close
Opposite to the expiry time extension, some brokers provide you with the opportunity to close your trade earlier than originally planned. Traders usually use this option when their trade is profitable and they are unsure whether it will remain like that. However, just like the trade extension, it comes with a limited time window – it becomes available 15 minutes before the expiry and lasts for 10 minutes. Also, brokers tend to charge a premium for this option which can amount to as much as 50% of the original payout.
Some brokers allow you to double your bet, in case you are feeling confident enough. The double-up option doubles your investment while keeping your current expiry time and direction. However, the entry rate will be updated to the current rate at the time the Double Up option was exercised. In exchange for our increased investment, we will logically receive the same rate of increase in profit, given the option becomes “in the money”.
Even if you choose not to use these options (rollover, early close and double up), all of them expand the range of trading decisions you can make and, thus, allow for more customization of your trading strategy. That is always a good thing.
Let’s say that a trader has just bought a put option on the USD/JPY currency pair. The strike time is 13:30, the strike price is 99.15 and the expiration time the trader picked is two hours. This means that the trade will close at exactly 15:30 and the trader will find out if their trade will expire in-the-money or out-of-the money. If at 15:30 the price of USD/JPY is lower than the strike price, then the option will expire in the money and the trader will collect his/her winnings. Conversely, if the price is higher than 99.15, say 99.25, then the option will be out-of-the-money and the trader will lose the capital he had wagered.
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