Every binary option broker and platform proposes a large range of different maturities for binary options (from 10 minutes to several days). Over the last years though, SPEED options (options with a time horizon or maturity of 60 seconds or less) have gained in popularity among retails investors. These new financial instruments have seduced traders that seek to quickly generate profit while investing low amounts of money. Are these new instruments more risky than traditional binary options? How to manage the risk of such options?
Speed Binary Options: Scalping
Let’s just remind you the basics of binary options: a “60 seconds” (or speed) binary option is just a binary option with a maturity of 60 seconds (also called SPEED options). You have to determine if the price of an asset will be higher (respectively lower) then the current price in 60 seconds. This is not an easy task considering the volatility of certain assets. Nevertheless, in financial market terms, 60 seconds is a quite long period. Some High Frequency Trading Hedge Fund can execute thousands of trades every millisecond. Trading binary options on such short-term period is often called “scalping”. In order to improve your scalping strategies you need to be able to identify trends and you need to trade these instruments at the right time of the day.
When to trade speed options? It is always better to trade SPEED binary options around the opening or the closing of the market session when trends are confirmed or rejected and when asset price can move significantly in one way or the other. When a market opens up, it has been statistically proven that it is likely to continue in the same direction for the first 30 minutes of trading.
Most popular market hours for trading Speed binary options
- First 30 minutes of the European market (08h00 – 08h30 London Time)
- Last 30 minutes of the European market (16h00 – 16h30 London Time)
- First 30 minutes of the US market (14h30 – 15h00 London Time)
- Last 30 minutes of the US market (20h30 – 21h00 London Time)
On the contrary, you should avoid to trade SPEED binary options when the liquidity of the market is low (when the volumes traded on the market are low). When the market liquidity is low, any little order by a major financial institution on a specific asset can make this asset price significantly deviates from its established trend, which is dangerous for binary option traders.