Financial products such as binary options allow the buyer to receive a gain or loss on their investment based on a specified expiration of the date, time, and strike price, and is then debited or credited on their account. Since they are so easy to understand, they are extremely popular for inexperienced or new traders.
What everyone wants to achieve is to be successful with their money, especially if results can be attained in the quickest possible manner. An effective way to do this is to manage a strong strategy in a trading procedure.
Although one minute might seem too fast and frequent to be able to make a sound assessment on the course of a trend, binary options traders can make potential gains out of fast-paced cycles such as the 60-second chart that is now being more commonly offered.
In this article, we look in-depth into 60-second binary options, its advantages and disadvantages, and how to strategize based on all the given information.
What Is a 60-Second Binary Option?
Put simply, it is when traders try to judge if a choice will be lucrative based on a trading algorithm within the short expiry time of a minute. This can be applied to any of the asset classes such as commodities, cryptocurrencies, fiat currency pairs, single shares, and stock indices.
There are numerous technical instruments to study the market and indicate trading signals for when traders can buy or sell options and where the former is more generally known as a “call”, and the latter is called “put”, respectively.
60-second trades are not the shortest expiration dates. Short-term trades are more widespread due to high demand from binary options traders and can vary from 5 seconds up until a few months. The technicalities though, are still pretty much the same.
First, let’s dive into the advantages.
1. Multiple Trades
Since you can make trades frequently, you have the chance to be able to make money rapidly so long as you know how to think on your feet by determining uptrends and downtrends, work fast, and are an expert in using charting software.
Since you are working within short time frames, you can execute essentially hundreds of trades per day. So, even if you are willing to put out only a small amount of money or assets, it can add up to be a huge profit at the end of the day to the point that you may be able to get between 70% – 85% of returns.
2. Lesser Amount of Time
Short-term traders mainly prefer to make a quick buck. Trading for only 60 seconds allows you to get a reward right then and there without having to monitor or keep a close eye on the market and events that might affect it in the long run.
If a stock is doing well as of this moment, it most likely will still be doing good 60 seconds from now, meaning you might not have to stay within the trades long enough before any major turnarounds, or in other words, flourish through small market movements.
3. Learning Experience
This is not just an opportunity to seize the benefit of getting huge earnings quickly, it is also the chance for you to gain experience and master trading.
Although it is simple enough for you to get down with the basics pretty quickly, through constant repetition from such frequent trades, you can also obtain helpful insights and quickly be more adept than you would have been as a long-term trader. This will also help you adapt to any highly volatile asset trades.
4. Low Trading Investment
Whether you choose to have a small investment or a large one to be able to make trades and still get a comparable percentage to higher bettors. Trades can go for as low as $5. Do take note though, that there are sites that will base returns on the size of the investment. Nevertheless, you still won’t be able to lose more than you are willing to risk.
Are there disadvantages? Let’s look at the most prominent ones.
1. High Frequency
The ability to make money fast is just as equal a scenario as draining your money at a click of a finger. Winning can come just as easy as losing, so it is all up to you if you are willing to take such a high risk. It takes time to be able to learn the probability and attain the instincts of the possible outcomes in the market, and so not everyone would find working with high frequencies an actual advantage. This is especially common with newbies who tend to “over-trade”.
This also does not help those that are highly dependent on trading signals as it might be too late to make your trade by the time you receive your signal, and so would have to be reliant on your own strategy instead.
2. Lower Payouts
High risks usually come with high returns. Although this is true in the case of 60-second binary options, payouts tend to be lower by 10% – 20% as compared to trading with higher expiry times. Furthermore, for binary options trading to be profitable, accumulating at least a 57%-win rate is necessary, so trading as If you are picking tickets out of a raffle draw might not be advantageous in the long run.
Before getting into the nitty-gritty, it should be stressed that you should consider these first:
1. Choose a Binary Options Broker
You can find a range of brokers online, but the best one to choose would be one that is regulated as well as one that you can get a high payout from even with a low deposit. Research on different minimum deposits a broker can allow and if it is worth it as it equates to the average returns a trader can get on its program.
2. Choose a Platform
You are in this to make money. Aside from picking a broker, you need to ensure that brokers can offer various financial instruments such as charting software that is effective in short-term trades. This goes hand in hand with the research for a broker, as some may not offer them.
A single beat can affect your earnings, so if a broker’s platform is not as responsive, the result of your trade might be badly influenced. This is a consequence you should not have to bear, so test with a broker demo account and see if it something you are comfortable with working with.
3. Do Not Get Carried Away by Emotions
An emotional outburst can cost you a win or loss but try to stay as level-headed as much as possible. Your personality plays a huge factor in how much money you can make, so remain rational and persist to assess even if it is difficult to maintain this level of concentration every single minute. Be strict with yourself in how you manage your money and do not spend more than 1% – 3% of the capital amount on every single option trade.
What Are the Key Strategies?
Take a look at some working strategies to follow:
1. Strong Trends
This approach may seem like the obvious way of doing things. Based on the current trend, if it has been going on a particular direction continuously within the past hour, follow the same pattern for the next 60 seconds as most likely will end up being the same result before major trend reversals.
2. Momentum Indicators
This can be considered opposite to the prior strategy and is more commonly used as this is using a switch to work to your advantage. This is where price action trading comes into play.
Short term trading is reliant on movements within a specific time frame, so using tools with candlestick indicators can help make informed decisions.
Through this method, you can also take advantage of when the market is volatile such as if there is a sudden occurrence of a trend like an unexpected headline of an event, which could affect the line to move in one direction, at least for the next 60 seconds.
Opportunities like these can be caught depending on how the starting and end points of candles are charted out.
The key here is not to mind the bigger picture. Your concern is solely when the specific asset you have chosen that is following a steady trend makes a shift so you can take advantage of those few minutes.
Watch any sign of weakness that shows it is up for grabs.
In more technical terms, you must immediately act upon the behavior of support and resistance levels. Some common indicators are ADX, MACD, and Bollinger Bands.
3. Price Gaps
Markets tend to have low volume and liquidity. These usually take place when trading sessions are about to end and about to start in another part of the world. When this happens, the volume goes down as there are no sudden external factors to influence anyone to take a position that differs from anyone else’s.
Traders then temporarily sell their asset short as it could be deemed too high for that moment. This is, of course, does not last long because algorithms are designed to search for such inconsistencies in the market, so these must be taken advantage of as fast as possible, which of course is beneficial to the 60-second binary options trader.
60-second binary options are popular as you do not have to observe the market throughout a long period of time and wait before a payout. Taking advantage of small changes in trends can be a lucrative venture so long as you do not lose control of your emotions and over trade. It is to be noted though that this kind of trading is not meant for everyone and that it does come with its disadvantages.
Statistically, if you study the market properly, you can get greater returns out of long-term binary options.
However, with the proper strategy, you can still make a good amount once it is all added up. The platform and broker you choose also play a huge role in whether this will be profitable. Two ways in which you can make the most out of your 60 seconds is to use momentum indicators which are able to reveal any fluctuations to the market since working within a minute would show a lot of volatility. The next would be through off trading times when traders are willing to momentarily depreciate the value.