When to Trade 60 Second Options
The emergence of the 60 second options has taken the binary options market by storm. According to brokers in the industry up to 70% of the options traded are 60 second binary options. These types of binary options give traders immediate gratification, but there are a couple of pitfalls that traders should be wary of, in making their decision to trade for a quick payout. 60 second options can play an important role for a binary options trader, giving them an advantage when an impetus for a move in a security is about to occur.
The 60 second binary option trades just like its namesake. The option expires within 60 seconds of the trader placing the transaction. Within less than a minute a trader can receive a payout of nearly 70%, but the catch is in the payout. Most binary options brokers pay investors approximately 80% for transactions that are 15 minutes or more. The payouts on a 60 second options range from 60 to 70% of the amount wagered. Although an investor might perceive that he has a 50% chance of winning 70% of his capital in 60 seconds, the reality is that over time, this strategy will be a losing endeavor unless there is a strong impetus for a security to move.
For example, if a trader wins 5 out of 10 trades, were each trade is $100 dollars, he will accumulate a $150 loss on all 10 trades. This would be calculated as +70 * 5 = $350 and -100 * 5 = ($500). With these types of odds, a trader would need to win more than they loss (60% to 40%) to accumulate a winning portfolio. In essence the odds are 15% in the brokers favor ($150 / $1000), which can be a tough mountain to climb.
One of the best ways for a trader to play the 60 second binary options market is to trade immediately before a fundamental event that can change their likelihood of winning. For example, trading prior to the release of economic data such as employment, GDP, CPI would give an investor an edge toward increasing the chances of winning. Any edge traders can employ will be beneficial to eliminating the broker’s odds that are stacked against an investor.