What expiry times to choose for trading binary options
WHen it comes to trading binary options, you have a variety of choices for what of expiry time (time frame) to trade in.
Many beginners are tempted to use the shorter expiry times, mostly because they want fast outsome. This choice however is the most risky one. In this chapter you will find out why.
The majority of binary options have expiry time ranging from 60 seconds to 12 hours. But there are also long term options with expiry times of up to 7 days and more.
The main difference lies in the level of predictability. As you see i the table above - the shorter the expiry time - the harder it is to make a logical forcast based on fundamental and technical analysis.
Looking for 70-90% chance of correct predictions?
For example if you know that there will be a referendum in the United Kingdom whether to stay in the EU or not, you can logically predict that in the longer term (days and months) the price of the British pound will fall against the EURO and other currencies. Investors don't like uncertainly, so they stop investing in Britain, thus the price of pound falls. Such situations offer an increased chance of winning when bigger expiry times are used.
Happy with 50/50 chance of winning?
It is almost impossible to predict the price swings based on fundamental factr in a time frame of 30-60 seconds. That's because there are too many often unforeseen factors that can influence prices in such short time. So these expiry time are more like gambling with 50/50 chance of winning. This however is not too bad rate comparing too traditional gambling opportunities.
Whit expiry time of several minutes and above, you can start to implement also technical analysis and predict the movements based on historical actions.
In order to confirm a trend use a candlestick chart with bigger time fram than the one you use as your expiry time.
It is Usually recommended to use a time frame of at least 1 hour for chart pattern recognition.
Short-term traders, however, may choose to use 1-minute and 15-minute candlestick charts.
The 1-minute chart provides entry and exit signals while the 15-minute and hourly charts are used to confirm the trend and support and resistance levels.
If you trade binary options with 15-minute or 30-minute expiry times, 1-hour and 4-hour candlestick charts can be used to determine/confirm your trend forecast.
General Risk Warning
The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.