The Basics Of Expiry Time Selection For Trade Contracts

Each and every binary options trade will require the selection of an expiry time. This will be the exact time at which the trade is considered to be closed. It will be at this point that the trader will know if he or she has profited, or has lost their investment amount. This determination will be made by comparing the asset price at closure to the price at market entry to ascertain whether or not the correct price movement forecast was selected.

The ability to select an expiry time is actually a benefit to the trader. Price movements are not everlasting, and therefore the trader must be able to forecast with some degree of accuracy just how long the prevailing movement may last. Ultimately, the broker is in control of which expiry times they provide in their platform, but in most cases there will be no shortage of variety. Expect to find super-short, mid-range, and extended expiration times within most platforms.

Of the available expiry periods, short-term are viewed as carry the highest level of risk. This may or may not be a fair assessment. While it is true that fast trading can equal fast losses, those who are able to correctly identify short-term movements only stand to gain from smaller trading periods. Today, periods as brief as 15 seconds can be found within some platforms, and most binary options brokers now offer a 60 second option.

The mid-range time periods offer some protection against strong shifts in market sentiment. These periods can also provide protection against some of the smaller retractions that take place while prices are on the move. Periods of 5, 10, 15, and 30 minutes are grouped into this category, along with a 1 hour period. Additional options may be provided when the broker provides a tool or specific platform for trade customization.

Long-term trades will include an expiry of an hour or more. In this group are periods of a day, week, month, or even a year. These expiration times can be a challenge, as it is nearly impossible to know what investor sentiment will be so far in advance. Decisions will then need to be made based solely on technical analysis which shows a slow, gradual price trend that is likely to continue on for an extended period of time. Longer expiry times should be avoided by those who are trading for the first time, but can be opted for after some experience has been gained.

Within some platforms, traders are given the opportunity to sell select open contracts back to their broker. This option is not offered on short-term expiry times, but should be available for mid and long-term periods. This feature can render the selection process easier, because if a mistake is made, the contract can be sold and the loss minimized. Contracts can also be sold for profit. This is an excellent option to have if the asset price moves into a profitable position, but then show signs of reversing direction.

It is common for traders to have personal preferences in regard to expiry times. If specific time-frames bring you more success, then feel free to rely upon them. However, never completely disregard any of the expiration times made available to you. Variety is extremely important when trading binary options. It will be all of the available trade parameters that allow a trader to enter into trades that pair correctly with the analyzed price action. Without this variety, traders would find it extremely difficult to achieve much success.