Have you ever wondered what is the best time frame for binary options? One of the reasons many traders choose binary options over other financial instruments is their simplicity. You only need to speculate which direction the price will take over a given period. If your prediction is correct, you'll earn some profit.
In addition, options are set to expire at a predetermined time. Many options brokers will offer option expiry periods that last anywhere between 30 second to months. On the IQ Option platform, the shortest time frame an options trade can last is 60 seconds.
Now shorter time frame offers the opportunity to make money fast. But the opposite is true, shorter time frames will lose you money fast.
In many of my guides, you'll notice that I always recommend that you enter trades lasting 5 minutes or more when trading currency pairs or options. This article will get into the reasons why it is important when you try to create the most accurate binary options strategy.
Small price fluctuations
Consider the EUR/USD chart below. I'm using a 1-minute interval candle chart. If you look closely at the support level (price at 1.1291) up to the close of the last bullish bar (price at 1.1292) the price has made a change of 0.0001.
If I decided to enter a 1-minute trade, I would actually be guessing where the price will end up at trade expiry. It's almost impossible to determine where the price will end up given the 0.0001 fluctuation. But if I decided to enter a 5-minute buy position, it's very likely that my trade would have been profitable.
This scenario isn't restricted to IQ Option only. All other online options platforms will exhibit similar price movements over short time intervals. The only way to have a higher chance of predicting how the price will move is by trading longer time intervals where price fluctuations are bigger.
What is the best time frame for binary options?
As mentioned before, your trades should last at least 5 minutes. But this will largely depend on the candle time interval. For example, if you're using a 1-minute intervals candle chart, your trades should last 5 minutes. If you're using 5-minute interval candles, your trades should last 15 minutes or more.
One reason why I recommend trading longer time frames is that price fluctuations are bigger. This way, it will be easier to predict the direction the price will take by the time your trade expires.
Psychological aspect of transaction length
Another reason why taking long positions is recommended regards emotional pressure. Consider the EURUSD chart below.
You'll notice that once the uptrend develops, there are several consolidation points. Here, bearish candles develop between the bullish candles. If you were to enter a 1 minute buy trade within the consolidation points, your trade would end up losing.
However, if you were to enter a buy position lasting 5 minutes or more, it's very unlikely that it would end up losing. Why? Immediately after the price correction, the uptrend resumes.
Although unverified, many traders believe that options brokers will try to manipulate prices over short time intervals. This means that you're very likely to lose money when trading short positions.
Price manipulation over a long period is likely to be easily noticed. So rather than keep worrying about the broker manipulating prices over the short term, wouldn't it be better to enter long positions without worrying?
How do you win every time in binary options?
There is no method to have a profit from a binary options trade every time. Even using long option expiry times will not change this. If someone tells you that they have a strategy that always wins on binary options, you can be sure that you are dealing with a scam. Increasing the option expiration time can certainly help improve the results, but it is not a guarantee of success in every single trade.
When should you enter short-term trading positions on IQ Option?
There are instances when trading 1-minute time frames can be beneficial. This is when the markets are clearly trending. For example, in an uptrend, you'll notice longer bullish candles forming.
This however requires a keen eye and the ability to act fast when you notice a trend. It also requires that you use additional technical indicators as well as support/resistance levels to be able to predict when a trend is actually developing. It also needs to be included in your binary options trading strategy.
Note that this also works when you're trading long positions.
How long do you hold your trade positions? Have you traded 1-minute time frames on IQ Option? We'd love to hear your views in the comments section below.
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