Strategies for the expiration time of binary options

Any trader thinks about effective work, is always in search of a productive strategy, reliable indicators, follows the rules of money management, studies special literature. All this is done in order to reach a new level of work with binary options, get a stable income and minimize losses.

So, trading becomes a serious job for those market players who are determined to get the maximum. Expiration is the concept on which the success and effectiveness of options trading depends and a thoughtful attitude towards it will give you a good income.

What is expiration time?

The expiration time is the moment when the binary option expires. Or to put it another way, it’s how long after placing an order you’ll expect a bet result. When you have bought an option and selected the expiration time, it remains to wait for the expiration time to end. Some brokers allow you to change the expiration date even before the expiration time, which is beneficial for traders , because allows you to minimize your losses. This feature is not available on all brokers.

Once the expiration date has expired, the platform will let you know if your prediction was correct or not. If you are right, you will find a certain percentage of payments, if not, you lose the value of the option.

What is Binary Options Expiration?

Each option has an expiration time – that is, a specific period from the beginning of the option to its end. When market participants make predictions about the increase and decrease in the price of an asset, this forecast is fulfilled only during the expiration period of the transaction.

Then comes the expiration of binary options itself (from the English “expiration” means expiration) – that is, the moment of expiration of the option, its final and the result of the purchased option, when traders learn about the result of their forecasts. Thus, the concept of expiration in options is the main indicator of income generation, which sums up the results of trading:

• If the forecasts turned out to be equal, the trader receives back the amount spent on the purchase of the option.
• If the forecast has shifted in the direction offered by the trader, he is paid a reward.
• If the forecast turned out to be incorrect and the market replaced the movement in the opposite direction, then the funds that the trader spent on buying the option are not returned to him.

Types of options by expiration time

When buying an option, you can use different expiration periods (from 30 seconds or more than a month) that your broker offers you. The expiration time that you choose plays a big role in the amount of income and the magnitude of investment risks. It is necessary to approach the choice of expiration time very carefully.

Types of options depending on the expiration date:

• Ultra-short options (express) – 60 seconds – 5 minutes.
• Short-term options – 15 minutes – several hours
• Medium-term options – from 6 hours – a day
• Long-term options – a day – several months.

A set of tools depends on the type of expiration, using which you will make trading profitable:

• When choosing a long-term expiration , it is necessary to focus on the events of this period (economic news, opening of an enterprise, elections, new products on the market, etc.). If the market is calm, long-term options are not needed. The basis for such trading is fundamental analysis.
• When choosing a medium-term expiration , it is necessary to use both technical analysis and fundamental analysis. Here, for forecasting, it is important to take into account the data of the news calendar, and the data of indicators.
• When choosing an intraday expiration , choose the end of trading by the end of each hour, which will increase the results of work. The basis of such trading: technical analysis.
• When choosing express expiration, you should use either special short-term and scalping strategies, which include a set of indicators that are able to identify false signals from high-quality and profitable ones. In this case, in many ways, you are playing roulette, such expirations are unpredictable.

How to choose the expiration time?

Long-term options are reliable. If you are in doubt about what expiration time to specify, choose a long term, which will allow you to see the full picture of the market situation. Often, focusing on the most recent data leads to errors, because You see a limited picture, you will not be able to see the emergence of a price trend and other facts that affect the formation of the price of an asset.

It is not for nothing that it is recommended to start trading with a long-term expiration. Such options have fewer risks, the result is more likely to be influenced by economic news and other events that can change the price dynamics. Such an expiration will not give you a high income, although it is less risky.

Intraday options are subject to risks. The peculiarity of intraday trading (which takes only a few hours a day) is increased risks, which are very common in ultra-short terms. Such trading is more suitable for those traders who like to take risks and are not afraid to take risks.

Express trading is a lottery. It also attracts newcomers, because. gives the prospect of getting quick money, which often leads to losses. It seems that with such a short expiration time (60 seconds) on the chart, it is easy to understand where the price will be in a minute, but in practice this is a difficult task. The fact is that in this case, technical analysis and macroeconomic data will not help you much. The final result of the transaction will depend on a combination of circumstances and such trades are similar to a lottery.

Experienced traders are advised to choose a middle ground, and after gaining experience, follow a profitable strategy or find your own effective system.

What determines the choice of expiration time?

The choice of expiration time is influenced by a lot of factors that you should take into account in your work:

Type of asset traded (for example, for indices and commodities it is better to choose short-term expirations, because they are stable and make express forecasts easier; forecasting the dynamics of currencies and stocks is better with the help of medium and long expiration periods).

Strategy. When choosing a trading strategy, remember that instruments behave differently at different time intervals. It is not for nothing that strategies are used for a specific expiration. Short-term strategies differ from long-term analysis features: for example, strategies that use fundamental analysis will not be able to work on short expiration periods (it is impossible to predict the consequences of major events on short-term expiration); For short expiration times, more advanced strategies are needed.

Types of technical analysis that underlie strategies. They spend different amounts of time processing the signal. This is also taken into account when drawing up strategies: for example, the fastest analysis is trading on combinations of candlesticks (2-3 bars). Working on a rebound from the level requires a short-term expiration (3-4 candles). Trades on the breakdown of the level will require even more candles (up to 10 bars). The longest is considered to be trading on the trend, where it is better to postpone the expiration date by 20-30 bars, because Correction of the market trend is possible.

Your experience. If you are a professional in trading, you can work with any expiration, while beginners are advised to start trading with long-term, more predictable expirations.

Your goal. If you need quick money, then. Accordingly, you will use short-term expiration, if the income is not so urgent – you can extend the duration of the expiration time.

Your trading style to which you are accustomed. Someone prefers to work with classic contracts, others with turbo options.

The personality of the trader. It is difficult to determine the optimal expiration time for options, since it depends not only on the external factors mentioned above (strategy, analysis or asset features), but also on the personality of market players: game style, financial investments, character and characteristics of psychology (not everyone will calmly wait for the end of the transaction in a week).

Broker. Each trading platform has its own individual set of possible expirations. For example, the Finmax broker offers a wide range of expirations: from 30 seconds to six months. In the image below you can see the implementation of the broker’s ability to choose an expiration: