Profiting from Longer Expiries with Binary Options

Profiting from Longer Expiries with Binary Options

Submitted by adil on Sat, 05/17/2014 - 08:42

With the passage of time, binary options are gaining popularity around the world. However, there are a small number of binary options traders who seem to trade with longer expiries. There is no doubt that short expiry periods and fast earned profits are very appealing for traders, but no one can deny that longer expiry period has its own advantages when you are trading in the binary options market.

Longer expiries or longer expiry periods vary from one trader to another. In today’s market, expiry period that lasts more than a day is considered to be a long binary options trade. So, the question is why a trader would want to trade longer expiries when he can make quick money from short expiry periods. The reason behind this is obvious. It is because fast trading would cause traders to lose money faster due to frequent losses, which occurs when the asset under observation need more time to adjust in the expected direction.

It takes some time for the price of an asset to reach the desired level with One Touch or Touch trade. It will take some time to notice the expected price action when there is a huge distance between the price of the asset when it entered the market and its targeted price. The traditional trades in the binary options market also works the same way. If you trade in call options when the market is bearish, the price of an asset will take a certain period of time to move and go pass the strike price.

Choosing the right kind of financial instrument is as important as choosing an underlying asset. It helps you identify how the past price movement is determined, especially over the long run. This will also help you gather plenty of useful information to determine the price movement, along with the ups and downs observed in the past prices.

Binary options trades that generate the highest profits usually have longer expiries. A trader can also buy binary options on weekend purchase, but the trade shall not be placed until the related market actually opens for trading. When the market finally opens, binary options can then be traded for the whole week. This type of trade is known as Touch Trade as it shows that you will be earning profits if the price of an asset touches the target level during the trading period. Many brokers in the binary options market usually add money to your account instantly. However, there are a few who wait till the period expires.

It is crucial for traders to prepare themselves when they are about to trade for a longer expiry period, or when they use a different expiry period. Preparation will help you trade successfully in the market. Some trade types and underlying assets work well during the long expiry periods, while others are profitable during the shorter expiry periods. Therefore, a trader should spend a considerable amount of time to understand which of them are profitable in the short term and which ones will be more beneficial in the long term.