How Postponing Binary Option Expiry Times Can Work in Your Favour
In the last lesson, we talked about how a new feature known as variable options could help traders to lock-in profits or cut losses. In today’s lesson, we shall talk about another feature that can work in a trader’s favour, which is the use of a feature we shall call the binary options roll forward feature.
So what exactly is the binary options roll forward feature?
This is a feature that allows the trader to postpone the expiry dates of the binary options contracts he has purchased. This is a trade preservation feature which attempts not to lock-in profits or control losses, but to give the trade more room to breathe in order to allow a trade otherwise destined for loss to recover.
Let us illustrate this with the same example that we used in Lesson 7. The trader placed a Rise/Fall trade with a bullish sentiment on the EURUSD, but the trade takes a wrong turn on Monday after a resuce mission by the Eurozone finance ministers over the weekend. Worse still, the expiry is set to Monday market close. Now if this trade is already in a loss position, there is no profit to rescue. Rather, the trader can decide to give the trade room to recover by extending the expiry date from Monday market close to a comfortable future date when he feels the bad news from the Eurozone would take hold of the market once more.
For this feature to work out well in your favour, you need to study the market and do some analysis to see if the trade truly has any chance to recover. The truth is that it actually works. For instance, I have just come out of 2 trades in the forex market; one for the EURAUD and the other for the AUDUSD. I was bullish on the AUD, but one of the trades was negative to -75 pips at a point, while the other was -30 pips at a point. Some traders would panic on seeing the red colour of negative pips everywhere, but knowing fully well that the AUD was soon to be on a bullish roll as a result of some positive market data, the trades were allowed to run and they recovered to 73 pips and breakeven respectively.
When you need some time to let your well analyzed but probably ill-timed trades to recover, the roll forward feature is what you need.
Using the Roll Forward feature will cost the trader some money, just as we have in the variable option feature. But this is a small price to pay to have your trade rescued from ruin.
Once again, it is not recommended to use the Roll Forward at the slightest opportunity; abusing this feature could get you penalized by your broker. It is very important that trades are analyzed carefully and expiry times planned properly so that you will not have recourse to using the Roll Forward tool every single time your trade runs into trouble. Do not succumb to the tendency to get careless with your trade planning just because you have a Roll Forward feature. It is only available on few broker platforms anyway, so many traders will not have the opportunity to use it. But if you are lucky enough to have an account with a broker that offers it, then use it carefully.