Classic binary options, the simple up/down trades, are renowned among traders for their short lifespan. Profits can reach 85% for a thirty minute trade, far more than what can be made when trading calm markets through the popular forex platforms. But the industry has been seeing an increased effort to offer both extremely short options, as well as a marketing push to promote long-term ones.
Two different audiences are being targeted through this. The short-term ones are aimed at traders who either have a purely recreational view of the activity, or people with less time, but who still want to get in on the action. The long-term options are designed to attract a more “investor” like crowd, both as individuals and institutions.
For the more entertainment minded, many binary options brokers have begun to develop options with expiry of one, two and five minutes. Some even go to rather extremely short lengths -15 seconds and 30 seconds. The argument for trading them is that they are essentially the market sped up, but questions have been raised if it’s truly trading when the outcome is decided by ticks on the chart. Some opponents say that even day trading is nothing more than noise within a trend.
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The most typical options remain the ones that are similar in length to most forex trades – between thirty minutes or an hour to expiries at the end of the day. This is because traders feel that they can most easily identify low and high points and resistance levels for these durations. Coupled with more visible trends, especially after important economic announcements, they get the most action. If a trader has some background in forex and relies on technical analysis or event trading, then these are the most suitable binaries for him.
Long-term binary options usually cover weekly, monthly and quarterly ones. This is the more investment-like choice, only with quite a high payout for such a duration. Trends are thought to be easier to spot over such periods, but the downside to these options is the risk of losing it all if you’re wrong and that the money is locked for the full duration of the option. Still, if you want to trade binary options, then do it with the lowest amount of risk, and after doing some homework and analysis, these are for you.
Regardless of what option you prefer, they are undoubtedly the easiest way to trade the markets and can appeal to a far wider audience than forex.