Since its inception, binary options trading has been associated with short term trades.
In fact, some of the most popular trade periods have been 60 second and 2 minute trades. As the trading form has evolved, however, so has the trade times.
There are now trades that can last for days, weeks, months or even up to a year. Of course, this still does depend on the broker that you are associated with.
As these longer trade intervals become popular, it does beg the question: long term or short term binary options trading – which one is right for you? Here are certain factors that may help you decide a position:
It Depends on Your Personality
What you are like as a person can have a huge impact on which time frame is right for you.
For instance, if you are in favor of the long game and can understand the advantage of waiting, then you will be well-suited to longer trades.
However, if you are ruled by impatience or if you are someone who craves a more exciting trading situation, then shorter trades are the answer.
Are You Satisfied with Lower Payout Rates?
On average, brokers tend to offer lower payout rates for smaller time frames. This is because these intervals are seen as being easier to manage.
After all, it is quite likely that a reigning trend will continue for a couple of minutes longer unless the market is incredibly volatile.
Due to this perception, most brokers will offer less in terms of the final payout.
With long term trades, the outcome is not always as certain, particularly if you the trade is set to expire weeks or months from now.
As the brokers have a better chance of the trade ending out of the money, they are willing to offer higher payouts.
Short Term Trades Favor Research-Oriented Traders
Although it may seem backwards, traders who have time to spend on research and price movement charts will be better suited to short term trades.
This is because short terms trades are easy enough to determine when there is a clear trend. However, when there is no such price direction, there needs to be greater amounts of research done.
This will help you, the trader, to identify those pockets of time in between where the price of an asset can increase or decrease. One of the best brokers for short term binary trading is highlow.
With long term trades, these patterns are a little easier to see. Since it deals with a broader period of time within the market, the trends and the movements are simpler to predict.
Different Time Periods are Conducive to Different Assets
Not all assets perform equally well for different trade intervals. With certain assets, you have a higher chance of ending in the money if you are trade is quite short.
For others, a longer time period may help you make a more accurate prediction. Commodities, for instance, tend to work best for short trades. This is because it tends to be a rather volatile asset and the price direction can change in the matter of days or weeks.
With stocks, on the other hand, you can make a good profit if you can identify a company that may see a price bump in their shares in the future.
In many instances, it doesn’t have to be a case of either/or with short term and long term trades. This is because if you manage to master both intervals, you can diversify your portfolio a great deal. This, in turn, will help to manage your losses.
Long term or short term binary options, which one is right for you, must be determined by you. In the end, you should realize that there is some benefit to utilizing both.