Expiry Times Explanation

Expiry times are one of the most important aspects of binary options. Traders who understand how to find the perfect expiry times for their trades will make a lot of money. Traders who lack this skill will end up broke. This article will help you to be on the right side of this line.

In this article, you will learn:

• What Are Expiry Times?
• Why Are Expiries Important?
• Which Expiry Times Do Binaries Use?
• How Do Brokers Use Expiry Times?
• What Is The Difference Between Expiries?
• Can I Change My Expiry After I Trade?

With this information, you will understand everything about binary options and expiry times, and you will be able to use the right expiry times to improve your trading.

What Are Expiry Times?

The expiry times of binary options define the time in which your prediction has to come true. While binary options always use the same term – expiry times – there are two different types of expiries. Those are:

1. Confirmation expiries. These expiries define the time by which your broker will compare your prediction to the actual market performance. High/low options and ladder options use this type of expiry. If you invested in a high option with an expiry of one hour, for example, your broker will wait an hour and then check your prediction. If the market trades higher than when you invested, you win your option. If it trades lower, you lose your option.
2. Deadline expiries. These expiries define a deadline by which your prediction has to come true. One touch options and boundary options use this type of expiry. If you invest in a one touch option with an expiry of one hour, for example, the market has one hour to reach the target price. If it touches the target price at any time within this hour, you immediately win your option. If it fails to touch the target price, you lose your option.

The whole process is simple. With confirmation expiries, you predict where the market will be at a specific point in time. With deadline expiries, you predict that the market will do something within a time span.

Bot predictions are similar but different. Some traders might do better with the one type than the other. We recommend to try a few different strategies and find out for yourself which trading style you like best.

Why Are Expiries Important?

Expiry times are the most important part of trading binary options. Assume that you are investing in a high option, for example. The underlying asset will eventually trader higher than now. Predicting that the market will rise is not the difficult part. The difficult part is predicting when it will rise. It might start immediately, and it might take a little while.

When you invest in a high option, the difference between winning and losing the trade is the expiry time you use. With an expiry of 30 minutes, you might win the trade, but win an expiry of 60 minutes, you might lose it.

Traders have long neglected to study expiry times. They believed that if an asset rises, any expiry will win them the trade. This is not true. The market rarely moves in a straight line; it moves in trends that take two steps forward and one step back. When you invest in rising prices during an uptrend, you might still lose your trade if you choose the wrong expiry time and run into the one step back. Similarly, some traders might use an expiry that is too long, which would mean that the current trend is over by the time their option expires.

When you trade options with a deadline expiry, for example a one touch option, expiries are important, too. To win a one touch option, the market has to touch the options target price. Longer expiry times use target prices that are further away from the current market price than shorter expiry times. It is important to give the market enough time but also keep the target price close. Experience will help you find the right mix.

Pay attention to the expiry you choose, and you should be able to avoid these problems. By reading this article, you have already taken the first step.

Which Expiry Times Do Binaries Use?

The unique advantage of binary options is the shortness of its expiry times. Banks have long offered assets that allowed for payouts of 70 to 80 percent on predictions about an asset’s price, but these assets have used expiry times of months and years. With binary options, you can make the same profit in a fraction of the time.

There are three types of expiry times for binary options:

1. Ultra-short expiry times. These expiries range from 30 seconds to 300 seconds. They are only available for a special type of asset – 60 seconds options. With these expiry times, you enter the market and get out of it within less than five minutes.
2. Short to medium expiry times. These expiries range from 5 minutes to a few hours. Typical examples are 5 minutes, 15 minutes, 30 minutes, 1 hour, 2 hours, and 4 hours. They are available for all binary options types.
3. Long-term expiry times. These expiries allow you to trade long-term predictions and range from a few days to weeks, months, and years. Most brokers offer them as a special type of asset – long-term options. Usually, they are only available for high/low options.

While all brokers offer short to medium brokers, not all brokers offer ultra-short and long-term expiry times. Some brokers try to offer a little bit of everything; some specialize in a special time of expiry. To find the ideal broker for you preferred type of expiry, we recommend taking a look at our broker top list, where we compare the best brokers and their features, making it easy for you to find the broker that offers the expiry times you are looking for.

How Do Brokers Offer Different Expiries?

Binary options allow you to choose your expiry times in two ways:

1. You choose the expiry. This is the classic system with which you choose the time until your option expiries. If you select an expiry of 1 hour at 1 PM, for example, your option will expire at 2 PM.
2. You choose the expiry time. Some brokers started offering this new system to offer a unique trading style. You directly choose the time at which option expires. Most brokers offer expiry times in steps of 5 or 15 minutes. For example, you could choose to let your option expire at 1 PM, at 1:05 PM, at 1:10 PM, and so on.

Both types of expiries are essentially saying the same thing in a different way. Most traders will do equally well with both systems, but if you have strong feelings in one way or the other, you should check which type of expiry a broker uses before you sign up.

What Is The Difference Between Expiry Times?

On the surface, it might seem like all expiry times are equal. Just pick the one that fits best, right? Unfortunately, things are a little more complicated.

Depending on your expiry, you will have to analyse different time frames, and different time frames require different strategies. For example, it would be a bad idea to trade a binary option with an expiry of 30 seconds with the same strategy that you used for an option with an expiry of 1 year.

To explain this connection, let’s look at the unique challenges of each time frame.

• Long-term binary options are heavily affected by fundamental factors. When you invest in a binary option with an expiry of one year or longer, you have to consider fundamental factors such as economic growth and stability. During the 2008 financial crisis, for example, long-term investors had to invest in falling prices – there was no other way to make money. Technical analysis can help you to find the right timing, but when the economy is collapsing, there is no sense in investing in rising prices. Similarly, an increasing money supply will almost lead to rising prices in the long term.
• Ultra-short-term binary options are completely free of fundamental influences. When you predict what the market will do over the next 30 seconds, economic developments are unimportant. These developments are solely based on the relationship of supply and demand, and technical analysis is the only way to interpret these patterns. Traders of short-term binary options should use strategies based solely on technical analysis.
• Short-term binary options might be influenced by fundamental influences. When you predict what the market will do over the next four hours, it is unlikely that fundamental influences will move the market during this time – but it not impossible. There are many days on which the release of scheduled news will dominate the market. Traders of short-term expiry times have to plan ahead for these releases and make sure that they do not influence their trading.

Your strategy determines the range of expiry times you can use. Before you decide on your strategy, you should, therefore, think about which expiries you would like to trade.

• If you want quick returns and short trades, there is no sense in choosing a strategy that trades fundamental influences such as a country’s foreign trade balance. You have to use a strategy based on technical analysis.
• If you want to invest for the long-term, you must consider fundamental influences. When a central bank floods the market with money, it will cause inflation, and the market will rise, even if the economy stagnates.

Consider these aspects in your trading, and you will be fine.

Can I Change My Expiry After I Trade?

Not so long ago, your expiry time was fixed once you invested. This makes sense because the basic premise of binary options is that you predict what will happen at a specific time. Nonetheless, some brokers have recently started to offer option types with variable expiry times.

These option types work just like a regular high/low option. You choose an expiry time and predict whether the market will trade higher or lower at this point. After you invested, however, you are not forced to sit and watch. You can actively influence what is happening to your trade.

You have three options:

• You can end the trade early. Most brokers continuously offer you a payout that you would get if you end the trade right now. The height of this payout depends on how your trade is doing. If it seems likely that you would win your trade, your broker will offer you more than if you had little hope.
• You can extend the trade. With this option, you can extend your expiry time, often by a factor of two. If you invested in an expiry time of one hour and extend the trade, your new expiry would be two hours. This option is ideal if you would lose a trade at this point but are confident that you will win it later. When the market has just begun to turn in your direction, this option might help you make an easy profit.
• You can double your investment. When a trade is looking like a sure winner, this option helps you to make more money with the same expiry time.

With these options, you are still not completely flexible in choosing your expiry time, but you have a lot of options.

Some traders consider these options unnecessary; some consider them to be the Holy Grail. There is no right or wrong in this question, and you have to decide for yourself whether these options are important to you. To find a broker that offers these options, take a look at our broker list.

Conclusion

Binary options success means managing your expiry times well. You have to choose the right strategy for your expiries and the right expiries for your strategy, and you have to choose the right expiry for the movement in which you invest.

The most important ingredient to finding the right expiry time for your trade is experience. With this guide, you have made a big step in the right direction. Take a look at our comparison of brokers, and you will also find the right broker.