THE HOT WINDOW
Part five: Binary options expiration times, and extensions
Expiration times are set after a trade is made specific to that binary option. When a trader predicts whether the price of an asset is either going to go up or go down, that prediction has to happen at the time of expiration in order to be paid for that contract. There are three types of binary options:
All three types of binary options have expiration times. However, a trader can use the binary options roll forward feature, to extend the expiration time set for an asset. Using this feature can work in the favor of the trader. In a case where a trade would be a loss if it meets the expiration period, the trader has the ability to use the roll forward feature to allow the asset to continue moving potentially in the direction of the trader’s prediction, and still make the trade positive. If a trader is sure that the price of the asset is going to move in a particular direction, but the timing of the prediction is just a little off, using the roll forward feature can make the trade work in the traders favor.
If a trader is sure about the research and analysis performed on an asset, even though the binary options expiration time was not consistent with the prediction, a trader should use the roll forward feature to give more time so the asset can reach the predicted target. Keep in mind, that there might be a fee with some brokerages for using this feature. However, the gain from using the roll over feature correctly encompasses small fees when predictions end up being correct. The roll over feature should be used cautiously; only when a trader is sure about the direction the price of the asset is going to move towards.
The trader must be certain about the direction the price of the asset will go in because in the same way that this asset can work towards the traders favor, it can also have the opposite effect. A traders lose will be greater on the same trade if the prediction is still incorrect after the expiry time was postponed using the roll forward feature. In other words, this feature doesn’t make the original loss go away. It simply gives you the potential to recover from the loss if your option’s price moves in the direction of your prediction. At the end of the second expiration time, your new gains minus your loss from the first expiration time, is your profit. You also want to make sure this feature is used only in the appropriate times. Your broker will probably not be too pleased if you use this feature anytime you get a chance.
Make sure you review your brokerage carefully to see if they offer the binary options roll forward feature. This is not a feature that every broker supports.
If you cautiously use the roll over feature in cases when time is not working in the favor of your trade, even though your confidence is high, based on sound research and analysis, this tool can become extremely useful, statistically leading to more positive trades. Using this tool correctly certainly can make your results more consistent in trading binary options.