Those types of trades do not involve expiry times. The expiry time of a binary options trade is one of its key identifying features. Anytime you buy a binary options contract, it will come with a set expiry time when the trade will expire either in or out of the money. If the market does what you wagered it will do and you are in the money when the contract expires, you win. If the market goes against you and you are out of the money when the contract expires, you lose.

Some binary options brokers do not give you any control over the expiry time. You simply have the decision to make of whether to enter a trade in the first place, given its expiry time and other details. If the expiry time on the contract makes sense to you, then you would enter the trade. If it does not, you would avoid the trade.

So say for example you are watching fifteen-minute price bars for a particular asset on your charting software, and you see a setup. You have every reason to believe that the trade will go your way within the next half hour, but you have no way to predict where the market will be in two hours, or in 5 minutes.

If your broker offered a contract that would expire in 25 minutes, it would probably make sense to trade it. If the only contracts offered expired in 5 minutes or in three hours though, you would not want to enter the trade. It would be too unpredictable.

These are three useful features you can use to control when your contract expires on certain brokers all three features are very common :.

The ones who did? They were the winners. What else did the rep say? Find out here. Before you even enter into a binary options trade, you should have a strategy in place for exiting. All trades, regardless of the instrument chosen, are linked to an expiry time.

This is actually one of the reasons for the popularity of this form of trading, as traders are not forced to make tough decisions about when to exit the market. Add to this fixed profit and loss amounts and it quickly becomes clear why so many individuals now supplement their income by trading binary options.

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Conclusion All trades, regardless of the instrument chosen, are linked to an expiry time. Add your review Cancel reply Your email address will not be published.

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Show Cookie Information Hide Cookie Information. Content from video platforms and social media platforms is blocked by default. If External Media cookies are accepted, access to those contents no longer requires manual consent. Privacy Policy. Percival Knight. I am an experienced Binary Options trader for more than 10 years. Mainly, I trade 60 second-trades at a very high hit rate.

There are many benefits to binary options trading over traditional stocks or Forex trading. Binary options are unrivaled in their simplicity. They are easy to understand and execute, even for beginners.

Some types of options even provide you with amazing opportunities you will find nowhere else. With Range trades for example, you can make money in flat markets. But one area where binary options are not superior to traditional forms of trading is where expiry periods are concerned.

This is something you will figure out quickly when you start trading. You are given a finite selection of trade opportunities and expiry periods. If you pick the wrong expiry time, even with a great trade setup, you will lose. So, how do you choose the best expiration period for your trades? That is the subject we will explore in this article. But first, I will go over expiry basics with you just in case you are a complete newbie. You answer that question by choosing High or Low sometimes termed Call or Put.

If when the trade expires you were correct, and the asset is priced as you anticipated, you would win. Otherwise, you would lose. If it was trading below it, you would lose your investment. With a regular FX trade, you would use a market order to buy immediately, or a limit order to buy when price hits a certain level.

You would then be in the trade. You can then sit around in front of your computer and exit the trade manually whenever you want, or you can set up a stop-loss and walk away to exit automatically at a certain level. You should now start to see why the expiry time system used in binary trading is restrictive. With traditional forms of trading, you can exit your trade whenever you want. That means you can be entirely strategic about it.

If necessary, you can do it on the spot. But with binary options trading, that is not always possible. The expiry time you picked at the start of the trade is the one you are stuck with there are some exceptions — see the section on early close below.

So how can you tackle these choices and choose profitable expiry times? Following are four suggestions. No matter what, the first thing you need is some kind of strategy to trade with. You need a system which gives you entry rules. You must start by learning how to recognize those formations.

Then you need to come up with a rule for how and when you will enter trades. The next recommendation is that you go through and backtest your strategy as you would trade it for traditional FX. Go through old charts and note down trade entries you would take as well as the exits you would ideally make. If the results are profitable, you have a system that may potentially work for binary options as well. Now you should have a pretty good idea what an ideal expiry time looks like for your typical trade.

If you have a broker that allows you to set customized expiry times, use what you have learned to do so. Just think of it like setting a stop-loss. Most binary brokers do not allow this however.

They will only offer you a certain selection of expiry times. It is up to you to pick the best one — or skip the trade. For example, the screenshot below from IQ Option platform demonstrates that the range of expiry periods is quite limited even with brokers that offer a rather flexible choice:. If there is an expiry time available near where you would set a stop-loss , that is a great choice, and you should go with it.

If there is not one, think about timeframes. Is there an expiry time which may still be appropriate given your trade? If you have been testing price action strategies on the 1-hour chart, for example, and most of your profitable trades during testing spanned several hours or longer, it makes no sense to pick an expiry time 20 minutes in the future, or several months from now.

But if there is something within a few hours, that may be a viable choice. Likewise, if you are a position trader banking on some kind of long-term political event, it would make zero sense to pick an expiration period which is just a few hours or days ahead.

And if you are using a strategy for scalping, an expiry time of even 10 or 20 minutes might be too much.

You may do better with second trades. A quick note about second trades: If you can profit off of them, by all means, do so. But if you are a newbie, it is important to recognize that this timeframe is incredibly volatile. So, if you are still in the stages of choosing a strategy, go with one that will naturally steer you in the direction of longer expiration periods.

You will be dealing with less volatility. Less volatility means less uncertainty, which in turn means a reduction in risk. The next tip for choosing appropriate expiration periods is to make sure that you demo test before you go live.

As was mentioned before, there are some questions about exiting trades which you cannot reliably answer while backtesting. But with demo testing, you can find out whether your strategies will work in real life with real-time data and trade opportunities. Either your trades will work out as planned, because the expiry times you need are readily available….

Your plan will not work out at all, because the expiry periods you need are rarely or never available…. Your system will sort of work. The expiry times may not always be ideal, but you may discover with some tweaking that you can get the results you need. You cannot overestimate the importance of this step.

There is no other risk-free way for you to know whether the system you came up with during backtesting is viable when traded live with real money. One of the more insightful conversations I ever had with a binary options broker concerned the early close feature which some websites offer.

Early close allows you to exit a binary options trade you are in before it expires. Different sites have different restrictions on this tool. A few sites allow you to use early close anytime. But most have some kind of limitations on it. For example:. Coming back to the conversation I mentioned, the owner of a binary site once told me that the single biggest mistake that traders on her site made was not using the early close feature.

She told me the vast majority of her customers were losing money, and the few that were profitable made great use of early close to minimize and avoid losses. So, if it makes sense with your exit strategy, do make use of this tool. Since you cannot customize your expiry times on most binary sites, early close is often indispensable when it comes to getting the exit time you need.

There is also a tool called rollover to extend a trade past the expiry time, but be advised to approach it with caution. Usually you are asked to increase your stake in order to extend your expiration time. Exiting trades profitably with binary options is a challenge compared to the traditional forms of trading, but definitely not impossible.

Now you know all about how expiry times work in binary options trading, and you are familiar with the obstacles involved with choosing profitable expiration periods. But with some testing and creativity, you should be able to pick binary options expiry periods that work for you.

Choose the Right Binary Option Expiration Period There are many benefits to binary options trading over traditional stocks or Forex trading. Contents What Is a Binary Options Expiration Period? How Is This Different from Traditional Forms of Trading?

Limitations of Binary Trading Expiry Times Start by Developing a Strategy Pick Expiry Times Appropriate for Your Timeframe Definitely Do Some Demo Testing Use Early Close Conclusion. Read more articles on Education , Strategy. Binary Trading.

Once you are done with that, you will need to register on the selected platform. Trading without a mental stop loss at the very least is actually just asking to lose your entire trading account. While there are some restrictions to trade binary options for this tool, the added level of trade structuring should be utilized in cases where a trade is unlikely to increase in profitability before the contract expires. Although they are available all day, most traders wait for a specific time to invest , and that is when the market reaches its best. Then apply your strategies and keep trading.

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