Binary Options: Purely a Short Term Bet?

If you are just starting your binary options trading journey then you would be forgiven for thinking that they were purely a short term venture due to its risky nature. However, binary options can form part of an effective, long term, diversified investment strategy. Investors that are able to ameliorate risk and mitigate factors through extensive knowledge and experience can begin to trade effectively long term in a range of binary markets.

Binary Options

Binary options are inherently risky but trading long term often serves better returns. If you are committed to binary trading and plan for the long haul then you can become very successful. You must resist the temptation to plump for short term strategies and fads that don’t serve your overall aims and goals.

What is long-term binary?

Long term binary options are different because they have longer expiration times. Short term options range from as little as 30 seconds to a maximum of around two hours. In contrast, long term binary can last from between a full day to several months. These options are generally easier to forecast as you will be able to exercise better judgement when selecting them and the fact that they are less volatile markets. Unlike the shorter form, long term allows investors to account for major events that can impact on asset movements.

Examples

An example of a long term binary options strategy would involve buying a contract that predicts the value of a tech leader such as Apple, Samsung or Microsoft prior to annual events and product launches. If you were to select a contract that expires the day after the event, you would be able profit by predicting that the value of the company would be higher compared to what it is prior to the launch. This strategy can be implemented for scores of tech companies and other similar situations as part of an effective investment strategy.

Brokers

Research and education are important aspects to consider for all investors. You must know the complexities and binary options trading as they are different to other trading methods due to their ‘all or nothing nature’. There are a number of online tools that can help you to decide on a binary option strategy and compare brokers. Selecting a reliable broker for your long-term plan is important so make sure that they are industry-recognized, offer the asset types you are interested in and have robust payment and withdrawal systems in place.

Risk management

Risk management is a core aspect of binary market trading. You should focus on money management to maximize profits and always aim to select the correct asset for each trade type for best returns. You could also employ a risk reversal strategy by executing CALL and PUT options on a particular asset at exactly the same time to reduce the the chances of losing on your investments. As with all binary options contracts, make sure you are well versed in trade pairings such as EUR/USD to increase your chances of making profit. Self-control, knowledge and experience will all help.

Long term binary options are becoming more popular and there is no reason why you can’t implement an effective investment strategy using both short and long forms of trading for success.

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