We have talked a lot about binary options and all that concerns including tips and mistakes, but there is one important thing on which we have not dwelt yet: the expiration.
This word is one of the most used when it comes to binary options but there are some people that do not recognize the importance. Probably because they do not know what is it.
The expiry is the expiration time of the binary option. This is one of the things that differentiate them from conventional asset because binary options have a predefined expiration time. It is something extremely important because it goes beyond the forecast itself.
The expiration time of a binary option is available with different maturity dates, starting with the smallest, 30 seconds, passing through intermediate levels (2 minutes, 15 minutes, one hour, and so on) until you get to over a month.
Basically, there are two factors to consider when choosing the expiration time of our options: the time frame of the used chart and the signal to enter the market.
The time frame of the graph is very crucial because this is based on the duration of the observed price movement.
Second, it is important to recognize and understand the nature of the signal and choose the best maturity even considering the time frame of the chart where it was observed the input signal. Not all the input signals are the same; there are signs that lead to price movements much more rapid and signals that lead to longer price movements.
Whatever the expiry adopted, it becomes fundamental to analyze with care the market conditions. Only when you cannot find the right trend, you can proceed to reduce the expiration time because the choice of shorter deadlines require a greater amount of trading but at the same time it is possible to be more profitable. That is why today most traders choose binary options with smaller deadlines.
In addition, to choose the correct expiration time it is very important also the strategy. Traders, who base their trading more on technical analysis, are more likely to select the longest.
What also affects the choice of maturity is also the type of option with which a trader decides to invest in the market.
So, what is the best binary option expiry? The right answer does not exist, because as we saw above, there are a lot of factors to consider. Timing is essential to win and make profits. As a trader, it is important to always estimate the duration of the movement you are expecting. Choose your expiration time according to that.
If it is the case of an option with an expiry of 30 minutes, so you predicted that the market will be trading higher exactly 30 minutes after your investment.
You will win even if the market traded lower for the entire time and moved higher some seconds before the expiration. Vice versa, you will lose if the asset is trading lower, even if it moved to the lower side a few seconds before the expiration.
There is just a case where choosing the expiry is simple than others: for touch options and boundary options. In these cases, the market has to trigger the target price only once before the option expires. Once the market has reached the target price, it is a winning game.