The option’s completion term can directly influence the strategy of trading. Options that are completed during few minutes or one day are the short term binary options. In order to trade them, you can apply different trading strategies.
What are short term binary options?
As mentioned above, options with the expiration time in a few minutes or during a day can be referred to the short term binary options. It makes a certain impact on the trading style of a trader. This is because the short term trading has the increased risks because movements in the small time domain can often be momentum and unpredictable.
For example, trader chooses ten minutes as an expiration time. It is possible to say that he chooses the short term binary options. However, unlike the Forex market, risks and a potential profit of a trader are known a priori. For this reason, the short term trading with binary options is more popular.
Risks in the short term trading can be related to different factors. For example, issue of the certain news can influence the movement of the underlying asset’s quotes dramatically. Therefore, this has to be taken into account when trading with binary options too.
In the period of serious market’s fluctuations, the short term trading acquires the special meaning. Along with high risks, you get an opportunity to earn fairly good money. In particular, in the moments when the new trend is forming in the market and a trader determines its direction correctly.
Short term binary options: what strategies can be applied?
You can apply the full variety of technical analysis’s tools and different strategies for the trading with binary options that have a short expiration time. For example, you can use the simplest ones: trend, levels of support and resistance, and even Martingale.
If a trader has determined the Call option and the Put option near the resistance’s level correctly, he can buy the Call option near the support’s level. The strategy of trading in a channel will suit the short term trading perfectly. If there is a channel in the chart, a trader can buy an option when the underlying asset’s price rebounds from the channel’s boundaries.
The short term binary options can be traded using chart patterns. And in this case, a trader has the wide suite of tools: from the trend continuation pattern to the reversal pattern. The main things to remember are the rules of their formation and how to interpret their signals. However, it is worth noting that the chart’s patterns in their pure form rarely appear on the charts.
For this reason, many speculators prefer to trade using technical analysis’s indicators. Based on them, they build different strategies and later use them to receive a signal for buying of the certain contract.
Technical analysis’s indicators can show the trend, in other words, the major market’s direction, and indicate that the underlying asset’s price will correct at the nearest time and, perhaps, the main trend will change to the opposite one too.
Therefore, the short term binary options provide an excellent opportunity to earn in the financial markets. But it is important to understand that such trading has some risks, so a key to the success in this case would be a rational management of your own capitals. If a trader assesses his risks correctly and manages to allocate his funds, he will be able to earn a good profit from trading with binary options.
Sponsor of the binary options encyclopedia is the OptionRally company