As we already explained, binary trading offers many advantages over trading in traditional markets. The main one being that you need the price to move in your direction just one tick in order to take full profit.
But as always there is but. You need the price to be higher or lower at a certain time which is represented by the expiration of your option. Be it a 60 seconds option, 5 minutes, 15 minutes, 1 hour or whatever, you need the price to be at the right place at the right time.
You don’t care where the price was before your binary option expired nor where will it be after the expiration. And that is probably the hardest aspect of binary options trading. You don’t need just to get right the direction of the price movement, but also the timing of your trade.
It could be that you place a Call (buy) and the price will be all the time higher, but right at the expiration it will jump for a second lower and you lose your trade. But on the other hand the price could also be all the time lower and jump higher just at the expiration for you to make profit.
As you see, time is very important in binary options trading and it can play in your favor, but it can also cause some frustrations. The good thing is that you can choose the expiration of your binary option.
Therefore you should pay great attention to the expiry when you place your trade. You should also take note of all your trades with details about the expiration time, what worked, what would not have worked etc.
In trading you can relatively quickly learn how to predict a price movement, but you will never know how far or how long the price will go in a direction. With binary options you face the factor of time, in traditional trading you face the factor of distance.
When you trade Forex for example, you have to decide what profit you are going to take, how far do you expect the price to go. And this is one of the most difficult things, because your exit determines the outcome of your trade at least as much as your entry.
When you trade binary options, you don’t have to think about the profit, because it is already given and fixed. But you do have to think about time, you need the price to do the right think at a given time. This is the main difference between options and traditional trading.