Although it may not seem apparent at first, there does exist a link between trade expiration times for binary options positions and fund management. Expiry times range from 30 seconds (or in rare cases even less), to one full year. Account funds change along with each trade that is opened or closed. As these changes occur, decisions will need to be made in regard to fund allocation and future investment amounts. Understanding the link between expiration times and fund distribution will help to eliminate a number of common problems.
There are two key benefits associated with the selection of shorter expiry times. These would be the potential to turn fast profits, along with the fact that these trades do not tie up account funds for an extended period of time. For some, having account funds locked up for longer time-periods may not be a viable option. Quick profits can provide quick loss recovery, but keep in mind that fast losses can certainly be problematic. A reasonably high win rate will be a must in order to avoid the issues associated with “rapid-fire” trading. As always, traders are advised to track their win/loss rates at all times.
Longer expiry times will lock up funds for a longer period of time, but they can be an important part of a money management plan that includes more steady profit building. Analysis can be quite the chore when working with long-term binary options trades, as forecasting future market conditions can be tough. On the other hand, those who are able to access market conditions over longer periods of time may certainly benefit from the use of extended expiry contracts. Note also that extremely lengthy periods are not the only option, as long-term positions may last a day or even a week, depending upon the options provided by the selected broker.
There are also mid-range contracts to consider. These time-frames do not fall into either the short or long term categories. These contracts can be the perfect option for those who fear the risks associated with fast trading, but would rather not have funds locked into positions over longer periods. The process of analysis tends to be simpler when working with mid-range periods, as it eliminates errors that come from analyzing volatile markets, while also eliminating errors that can come from long-term predictions. Many successful traders do choose to work with mid-range expiration times.
One of the most popular money management plans includes the use of a set percentage of overall account funds, regardless of the expiry time chosen. This type of plan can work well, but traders can still run into problems when exclusively selecting short-term positions. While one strategy may work extremely well for one, it may not provide the same results for another. Each trader differs with regard to trading style and fundamental methods. While this fact may seem disheartening on some level, the fact of the matter is that those who trade binary options are always able to perform only the actions which deliver the greatest level of success.