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Since binary options were first debuted to the retail trading sector in 2008, nobody could have foreseen their explosive growth. Today, it has become of the fastest growing markets of the online financial trading industry. One of the key reasons for their explosive growth lies in their extreme simplicity – both in understanding and then trading them. In addition because of their short expiry times, investors are able to turn around their investments quickly. This is especially true in the case of 60 seconds options where the typical expiry time is just one minute.show more
Binary options are essentially derivatives and they cover all the major asset classes such as currency pairs, stocks, market indices and commodities. The investment which the trader makes on binary options represents the premium paid on the option contracts. Returns on binary options are also fixed and predetermined hence making it easier for a binary options trader to quantify his trading risks. Depending on which binary options broker that you are trading with, the returns on binaries ranges from an average of 70% to 90% for classic High/Low binaries. For certain binary option types such as one touch options, the return can touch as high as 300%.
Typically, binary options are traded on an intraday basis. With the expiries of binaries ranging from 30 seconds to as long as a year, the time frames of the binary options charts used is of tremendous importance. This is because you need the appropriate time frame in order to discern the price movements of the asset that you are trading in. For example, if you are trading short term binaries such as 60 seconds options, there is no point in having a daily price chart or a weekly chart as you can hardly discern the price fluctuations on the chart. Instead the correct time frame for your trading chart should be in minutes.
When trading with longer term binary options, the correct time frame to use for your price chart should be one that is long enough to cover the price movements. The longer the expiry time for the binary options traded, the longer should be the time frame of the price chart. Hence for one touch options where the expiry time is normally set at a week, the ideal time frame for your price chart is one that uses the daily closing prices. For binary options that expire in 30 days, the time frame used can be daily or weekly depending on the extend of details that you want to view.
Because of the varied expiry times for binary options contracts, binary options charts have the widest range of time frames. As a binary options trader, knowing the correct time frames to use on your chart can mean the difference between profit and loss. If the time frames used on the price chart are incorrect, then there is a possibility of your misidentifying the current trend in the market hence leading you to make the wrong trading decision.