Trading Guide: Pros and Cons of Trading Long-Term Binary Options

You may know long-term trading by its more common term-investing, a term which is somewhat stranger to the binary options space when thinking about 5 or even 1 minutes expiry options.

Binary options were devised with the idea of exploiting the smallest movements in the market, so it may seem illogical to trade them long-term. However, the same logic makes them more predictable and safer for long-term assumptions, especially for brokers who offer the close before expiry feature.

Consider, for example, trading a yearly Google option that will expire in 10 months. You can wait for Google's quarterly earnings reports and periodic news announcements, constantly keeping up with the company's chart to see where they are heading. Such an outlook can provide more data and help in trying to analyze the company's performance for several months, before the option is no longer available for trading.

Another important fact is the ability to curb the emotional factor. It is well known that emotions may affect and even harm traders' decisions, and opting for longer term options leave a smaller room for the "exciting" nature of the intraday binary options trading.

On the other hand, this means that the traders of longer terms options are unable to react to market developments and take advantage of them, as their funds are locked until the expiry.

There are some brokers who offer long-term touch options that can prove useful in situations like this, but they carry an additional amount of risk as well.

Trading long-term binary options is not necessarily better or worse than shorter ones. We can compare the two instruments to a fancy convertible sport car and a sturdy 4x4 vehicle: It does not matter which one you choose, as long as it drives you home.