60 Seconds Binary Options

(source: 24option.com)

First, let’s define what 60 seconds binary options trading are. Like the name suggests, they are simply binary or digital options that expire in one minute. The trader has the ability to select a currency pair of their choice, and then decide on whether or not it will be higher or lower in the next 60 seconds. Of course, there is plenty of trading platforms that offer this type of trading; the above image was taken from 24option.com.

Now, there is definitely an allure about them. It gives the investor the ability to place multiple trades in a day and get an outcome in a very short period.  With that said, should new traders get involved with 60 second options? The answer is NO. For the most part, someone new to trading lacks a strong grasp of technical analysis. Not only that, but when you trade a short time period, you could be just trading noise. What that means is that a currency can be showing a trend during the day, but when you try to analyze it on a one minute basis, it could look very choppy.

The above chart was taken from tradingview.com, it’s a one minute candlestick chart of the EUR/USD.

Notice how the chart moves from bearish to bullish and from bullish to bearish so quickly. What is going to happen the next minute? It can be argued that you are trading random noise. For the new trader, this is a quick way to lose money in their trading account. The benefit of trading binary options is that it gives the trader a low cost of entry, and gives them the ability to learn about the markets without the fear of getting stopped out of a trade. The new trader will learn nothing from trading on a minute time frame.

With that said, you’re at the mercy of the trading platform to spit out accurate prices. Of course, this can be overcome by selecting a broker who is regulated. That is, regulated firms must uphold to stricter policies, rules and regulations. You should never trade 60 second options with a non regulated broker, after all, it’s their word against yours, and without regulation you’ve got no protection.

At the end of the day, without technical analysis, you’re making a coin toss. Since, binary options trading is based on picking market direction, the trader should use time frames that enable them a way to identify a trend. Each trading instrument is different, for example, some stock traders will use 5 minute bars, while some FX traders will use 15 minute and 4 hour bars. The key is to figure out what you’re trading and see which time frame helps you identify the trend. Of course, there are always event-driven catalysts, where the trader can ignore the chart and just trade off how the crowd perceives the news.

In conclusion, trading binary options offers investors a great way to trade the world’s most popular financial products for a very low price. In addition, it gives traders the ability to gain valuable market knowledge. But trading 60 second options are better suited for times when the market direction is strong with likely outcomes.