- Binary Options Contract Lengths Explained
- Lengths Of Binary Options Contracts
- Types Of Binary Options Contracts
- Binary Options Contract Lengths & Strategies
- Broker Availability
- Binary Options Contract Lengths
- Platform & App
- Bonuses & Rewards
- Demo Accounts
- Assets Available
- Final Tips On Choosing Binary Options Expiries
- What Is The Meaning Of Binary Options Contract Lengths?
- What Are The Best Contract Lengths For Binary Options?
- What Is The Best Broker For Turbo Binary Option Contract Lengths?
- What Are The Best Times To Trade Binary Options?
- How Do You Trade Different Binary Options Contract Lengths?
Since a binary options contract can have an expiry time ranging from under a minute to a month or more, this is a financial product that can accommodate a range of different trading styles and strategies. This guide will provide answers to questions on binary options contract lengths, with key data on how expiry times differ and how they affect the trading experience, as well as information on important related factors such as strategy, broker availability and trading platforms.
Binary Options Contract Lengths Explained
Binary options present traders with the simple question of whether an asset will trade higher or lower than a specified price at a certain point in the future. For example, will the price of Tesla (TSLA) stock be above or below $250 in 24 hours?
One of the most important factors affecting the trader’s answer is the binary options contract length.
Lengths Of Binary Options Contracts
A wide range of contract lengths are available to binary options traders, which we can group into three loose categories:
- Turbo – Generally any binary options contract with an expiry time below 5 minutes. The shortest expiry times can be less than a minute.
- Standard – Classic binary options contracts, with longer expiry times than turbos. Some of the most popular expiries are 1 hour, 4 hours and 1 day, usually defined as the length from the beginning of the contract until the end of that day’s trading hours.
- Long-Term – A binary options contract of more than one day. Weekly and even monthly contracts are not uncommon, and the longest expiry time may even reach a year.
Types Of Binary Options Contracts
Naturally, the contract length will have a huge effect on the way you plan and execute a trade. The type of binary options contract is also important to strategy, and traders will choose an expiry time and contract type that complement one another.
- Classic – The most common binary options contract simply asks whether the price will be above or below a strike price when the contract expires. For example, will one gram of gold be worth more or less than $50 in six hours?
- Touch/No Touch – This contract asks the trader to predict whether the price will reach a certain level at any point before expiry. If the price touches, the contract will immediately end. For example, will the price of gold hit/touch the $50 price level at any point within the next six hours?
- Range/Boundary – This binary options contract pays out if the trader correctly predicts whether the price will end up within or outside a given range at the expiry time, often with staggered payouts. For example, will the price of gold be worth between $50 – $52.5, $52.5 – $55, or $55 – $57.5 in six hours?
Binary Options Contract Lengths & Strategies
To make a profit from trading binary options, you will need the discipline to develop and follow a system that defines the size of your positions and how you manage risk and your trading funds.
A turbo binary options contract could be set up, executed and paid out in little more than a minute, meaning a trader could carry out dozens or even hundreds of trades in one day.
As a result of the very short time frame, well-known methods of technical analysis are less applicable, and some see turbo binary options as a form of gambling. However, many day traders have developed strategies to read turbo charts, and systems which harness their intuition about ultra short-term price movements.
As the contract length gets into the hours, traders will be more comfortable applying technical analysis to their trades. Hourly or 4-hourly charts are popular with traders analyzing price action, trading volumes, volatility and other indicators to identify a good entry and exit point.
These are excellent for day traders with knowledge of how to read shorter-term market trends, particularly if they have experience trading a particular asset type.
They could also suit a trader who has a hunch that a market fluctuation is in the offing and wants to put their money on it.
As the length of binary options contracts increases, traders will need to apply more of their knowledge on current events and macro trends when they decide which way to bet.
Binary options contracts of weeks or more would suit traders with experience trading standard options and other classic derivatives, who know what factors to consider when speculating on longer-term price action.
When you know which time frame you wish to trade, research a list of binary options brokers who offer contracts of the appropriate length so you can compare their strengths and weaknesses before choosing a platform.
Binary Options Contract Lengths
A useful starting place is to find a binary options broker whose specialty is the contract length that you’re interested in trading.
Some brokers, such as IQ Option and Pocket Option, focus on turbo contracts, with IQ Option’s default contract length set to 1 minute. Spectre.ai, which offers a crypto-based digital contract product, has even faster expiry times of just 10 seconds.
Alternatively, US-based traders may turn to Nadex, which offers longer-term binary options contract lengths of weeks and even months.
Platform & App
If you’re trading binary options with short contract lengths, a quick, user-friendly and responsive trading platform will be important. Many traders prefer to use a well-known trading platform such as MetaQuote’s MT4 or MT5.
However, some brokers offer a proprietary, browser-based platform, and if this is the case it is worth reading customer reviews and testing the platform with a demo account.
Quotex is one binary options broker whose trading platform has garnered good reviews for its speed and responsiveness.
Similarly, if you are trading on the go, look for a binary options broker with a good mobile app. Make sure the broker’s application is available for download to your device (iOS, Android, Windows etc), and check user reviews before signing up and staking real money on it.
Binary options have been restricted in some major jurisdictions, so it is unusual to find one that has been regulated by an official financial authority. The CFTC-regulated Nadex in the US is a rare exception to this, and offers standard binary options contract lengths and expiry times.
Nevertheless, there are a number of measures a trader can take to ensure their broker is trustworthy. Read genuine user reviews and comparison websites to get an idea of which brokerages are trustworthy. Also look for two-factor authentication (2FA) at the login stage.
One thing that is particularly important to ensure for short binary options contract lengths is that the broker uses real market prices as a benchmark. If they reserve the right to set their own prices, then there’s a chance the brand may act dishonestly.
A payout of around 90% of the stake is considered good, though this will depend on the terms of the contract and the asset being traded.
Due to their unpredictability, short-term binary options contract lengths tend to offer higher payouts. Particularly volatile markets, such as cryptocurrencies, also tend to offer bigger payouts.
Bonuses & Rewards
Some binary options brokers offer a reward when signing up or a cash bonus when you make a deposit. Since the bonus cannot be withdrawn unless you meet certain criteria, such as earning a multiple of the bonus amount, it is considered by some binary options traders as a useful way to test a short or long-term trading strategy or a new market.
A free demo account is an excellent way for a user to build up their skills at trading binary options with different contract lengths. Since turbo contracts can take place at such a high volume, it can be easy for an inexperienced trader to rack up serious losses. Demo accounts allow them to gain experience and build a system with the expiry times of their choosing.
Different markets have their own characteristics, and these are important when choosing a binary options expiry time. Some forex pairs, such as GBP/EUR, have historically been less volatile, while with cryptocurrencies you can expect more extreme and frequent price fluctuations.
Traders may also wish to have access to a particular stock exchange, such as the S&P 500, allowing them to speculate on the price of the world’s biggest tech firms.
Remember that the asset being traded will affect your strategy just as much as the contract length. So, your strategy for an FX binary options contract with a 5-minute expiry time will be different to the strategy you use for a similarly timed trade on a commodity like gold.
Final Tips On Choosing Binary Options Expiries
Each trader has their own style, and as each style differs, so will their ideal binary options contract length. Many traders enjoy the quick pace of turbo contracts, while others prefer the added time for technical analysis that longer contract lengths offer.
Traders need to decide on how often they want to trade – daily, weekly, or every few minutes – and take into account the different systems needed for various binary options contract lengths when building a winning strategy. Traders should also carefully consider the brokers on offer and take into account payouts, security and other factors before they commit real cash.
What Is The Meaning Of Binary Options Contract Lengths?
The definition of binary options contract length is simple – it is the amount of time between the start and the end of the contract. In a standard binary options contract, the trader must predict whether the price will go up or down during this interval. The contract length can also be expressed as the contract ‘expiry time’.
What Are The Best Contract Lengths For Binary Options?
Binary options contract lengths range between seconds and months. A trader who finds that a 30-second expiry time works well for them may be surprised that a trader can turn a good profit on a 1-week binary options contract and vice versa. The best way to discover which binary options contract length suits you is to practice with a variety of expiries using a demo account.
What Is The Best Broker For Turbo Binary Option Contract Lengths?
Pocket Option and IQ Option are geared toward shorter expiry times. But importantly, make sure the broker has a good, fast and responsive trading platform if you plan to trade turbo binary options. Also, bear in mind that you will need to find a broker that operates in your country.
What Are The Best Times To Trade Binary Options?
The best time to trade binary options depends on what you’re trading. Many binary options brokers facilitate 24/7 trading, but if you want to trade on a specific market, then this may be limited by the county and trading hours of that market. This is why many binary options traders seek a broker that allows them to speculate on cryptocurrencies, since these operate 24/7 and you can continue trading binary options contracts of any length long after other markets have closed.
How Do You Trade Different Binary Options Contract Lengths?
The way to open a trade on a binary options contract of any length will depend on the broker you are using. Usually, a tab on the broker’s trading platform will allow you to select the size of the stake, the expiry time, and other criteria for setting up your binary options trade.