How to choose binary option expiration period correctly
Many novice traders note that binary option trading is not as complicated as classical Forex trading. However, even here there are a number of difficulties due to the timing of option expiry. Often the wrong choice of this term leads to a negative result. This happens even during the correct analysis and the proper approach to the work of the trader. Let’s try to figure out how to choose the optimal duration of the option for your trading style.
For ultra-short or intraday trading, the best option is the option expiration during the trading day, when the fundamentals complete their refinement and the market begins stagnation. However, if you trade faster options, the most logical conclusion to link the trading with the end of an hour.
For short-term trading, which is usually seen within one week, the term logical is logical to been chosen for a few days, but it is desirable to complete option trading until Friday evening, as over the weekend unforeseen events could significantly change the balance of power in the Forex market.
Medium-term trade associated with periods of weeks to months. In this case, if you are not relying on specific fundamental events and technical analysis, you’d better choose a neutral term of the option expiration. Let this be a period of 2-3 weeks, that is, the average time of transactions in the medium term.
For long-term trade-related investment decisions with long-term (from one month or more), the term of expiration will be easy to choose: it is determined by the events that you expect in the future (for example, the deadline of currency intervention).
What periods can novice binary option trader use? Given that short-term options trading is often accompanied with low trading information, as well as a significant share of excitement, it is best to choose the options, expiring not earlier than the end of the trading day. If you want to get more stable results, try yourself in the medium and long-term forms of trade. However, it is not recommended for beginners to use ultra-short forms of work – it can lead to the game with respect to trade, resulting in a rapid loss of money. Tic options for beginners are too strongly resemble roulette game.
Along with these common characteristics it can be added that traders often assume how many bars will begin to fulfill the transaction. It helps to choose the best option expiry time. So try to figure in the head how many candles you may need to implement your ideas, multiply it by your time frame and feel free to buy an option to needed expiry time.
As you can see, the term of the option expiry can be free for choose. However, before buying an asset, try to answer the question, why did you buy it on this term. It is important that you clearly understand your trading style and expiration dates are associated with it, in fact it is the main guarantee of stable binary options trading.