How to choose the expiration date

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How to choose the expiration period when trading binary options?

Nevertheless, in trading binary options there are a number of difficulties that are associated with the choice of the expiration dates for the option, because the mistake made during the selection most often leads to losses even with the analysis and correctly planned work of the trader. Let’s try to clarify the issue of determining the timing of expiration in binary options trading.

Most traders are of the opinion that trading binary options somewhat simpler than classic forex trading. Nevertheless, in trading binary options there are a number of difficulties that are associated with the choice of the expiration dates for the option, because the mistake made during the selection often leads to losses even with the analysis and correctly planned work of the trader. Let’s try to clarify the issue of determining the timing of expiration in binary options trading.

Dependence of the expiration period of a binary option on the trading style

  • With long-term binary options trading (from a month or more), the process of determining the expiration date does not represent any difficulty. It is determined based on the timing of events expected in the future. It could be an expiration date. foreign exchange intervention, change in monetary policy by the Central Bank and more.
  • In medium-term trading (from a week to a month), emphasis should not be placed on fundamental economic events, but on the results of technical analysis. In this case, the best choice would be a period of two or three weeks, that is, the average life of a medium-term transaction.
  • In short-term trading (up to 1 week) it would be logical to determine the expiration period within a few days. There is one significant point – it is recommended that binary options trading be completed before Friday evening, as over the weekend some events can occur that seriously affect the market picture.
  • For intraday binary options trading, the best choice for the expiration date is the end of the trading day, since all fundamental factors have already been won back today, the market is entering a stagnation phase. When trading faster options, the guideline for the expiration dates should be the end of the trading hour.

The choice of the period for trading binary options

So what period does a beginner need to choose trader for profitable binary options trading? Taking into account the fact that short-term options trading, as a rule, is accompanied by a lack of significant trading information, as well as a significant share of excitement, binary options are the best choice, the expiration period of which is no earlier than the end of the trading day.

To achieve more profitable and stable results when trading binary options, it makes sense for a novice trader to try medium-term and long-term trading. The use of super-short terms in binary options trading is not recommended for beginner traders, as they can lead to the formation of a gaming attitude and financial losses. The use of tick options by beginners will generally look like a game in a casino.

Dependence of signal processing time on trading tactics

Along with all of the above, it can be noted that traders often calculate how many bars an open transaction will start to work out, which also allows you to choose the expiration dates of the option. Roughly speaking, for this you need to figure out how many bars will be needed to implement the plan, multiply it by the one used timeframe and then buy the option for the resulting time.

It should be remembered that a certain trading tactic provides for different times necessary for working out a trading signal:

  • The fastest for working out a trading signal is trading by candlestick patterns – 2-3 candles.
  • Trading on the rebound from the level also implies a quick expiration time – 3-4 candles.
  • Trading binary options using breakdown certain levels require a little more time to work out the signal – up to 10 candles.
  • The longest period is trend trading, since you have to take into account a possible correction. In this case, the expiration period of the options should be chosen within 20-30 candles.
  • When trading using fundamental factors, the range of options expiration periods is very wide. For example, when trading on news, it can be several minutes, when trading on goals that the Central Bank has determined – up to a year.

Summing up, you can see that the expiration dates of binary options can be any. However, before you buy an option, you need to answer your own question – why do you buy an option for such a period. It is very important to understand that the timing of options depends on the style and tactics of your trading. A proper understanding of these relationships will be the key to your stable and profitable binary options trading.

7 Binary Options

A decent binary options trading approach is impossible without considering the expiry times. We talk about the period when the contract ends and the option gets closed. This is the time when you, as a trader, get the final result – a profit or a loss. Because of its huge importance, the time expiry should be well defined in every binary strategy. It would be unproductive to watch the minute chart when the expiry time is set at several days distance or to monitor a daily chart when the binary contract expires within minutes. Thus, one of the most important things is to adjust the time-frame to the expiry time and vice versa.

For instance, if you watch the 4H chart, you would be tempted to set expiry times at much larger distances: from several days to even several weeks. Moreover, if you know how trade on patterns (which is in fact quite lucrative), you may find hints relating to what expiration date is better to pick.

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Choosing the Expiration Date

Despite the widespread opinion, trading binary options is much harder than many other trading forms, since you have to choose the expiry time with every binary contract. In Forex trading, there is no expiry time, which allows traders keep the trades as long as needed.

In binary trading, there are occasions when the price keeps in the money for almost the whole period and then, close to the expiry time, it suddenly falls and you record losses. It does not make any difference if your trade was ‘almost perfect’ once you lose your whole investment. To avoid such disappointments, you should learn to control the expiration dates.

Rookie Money Management

One of the basic ways to maneuver the expiry times is to consider the money management methods. For instance, let’s imagine you have made a trading program for the weekend that comprises four assets. Now, to apply a basic money management method, you would have to split your potential investment in four equal parts – like one for gold, one for Apple, one for EUR/USD, and one for GBP/USD (it can be any asset). Next, you should split each part in smaller quantities, depending on the number of trades. In the end, once the money is properly distributed, you can trade on both short and long expiry times, and the composite result may be a profit or a loss, but none of them in the extreme.

Using Timeframe to Choose Expiry Time for an Option

It is very important to stick to the plan, because this is the purpose of a plan – to be respected. Choosing the expiry time should be done in accordance with the time-frames that you operate with. For instance, let’s imagine that you apply a strategy based on the RSI oscillator that evaluates the overbought and oversold levels combined with the divergence. If the RSI parameters are evaluated on the hourly or daily chart, then it would be useless to set an expiry time sooner than the end of the day.

When you set the expiry time at the end of day, it doesn’t necessarily imply that you have to wait for a whole day for the contract to get closed, because if you place a trade closer to evening, then only a few hours would be left for your position. The same thing is true when you set the expiry time at the end of the week or at the end of the month. For example, when you trade on Friday by setting an ‘end-of-week’ expiry time, your position would have less time left than when you start trading on Monday and choosing the same expiry time. Thus, you should use technical analysis and money management methods to stay away from one of the crucial mistakes: overtrading or trading short expiration dates when long-term expiry times are not actually taking that much time as it seems.

Short-term Expiry Rates

By applying the methods described above, you can benefit from the fact that the volatility created by economic reports will have a much lower influence on the final result, as the expiry time will pass over it. There are traders who don’t support short expiry times and there are traders who don’t support longer expires either. As a trader, you will have to determine your own balance between these relatives. This is possible only with a strong discipline and proper market analysis.

When we say analysis, it doesn’t necessarily mean technical analysis. You can trade based on fundamental analysis too. I mean you can trade on the news. Anyway, if you trade on the news, you should not ignore the wider picture, because in cases like this, you wouldn’t succeed without setting medium or long term expiration dates, and a long-term expiration date without a wider picture is simply not acceptable.

We hope this post will help you understand the important connection between the different time-frames and the expiry time you should pick. The time-frame reveals your trading style, like long-term or short-term, but the expiry time will reveal if you end up profitable or not. Setting the expiry time has the same importance as choosing between the Call or Put options. Many traders don’t understand this huge importance, but we are sure that after this article, you will know how to deal with it and how to set the expiry time in your favor.

Your Goals Have an Expiration Date — How to Focus on Long-term Systems Instead

Three real-life strategies for building sustainable systems

You’ve heard it a thousand times. Goals should be SMART:

Specific, measurable, achievable, relevant, and time bound.

But no matter how smart your goals are — ranking your success by your ability to achieve results in a certain time frame is a slippery slope.

Which sounds like a healthier option: Skipping lunch every day for a month to drop a few pounds for vacation or adding a serving of veggies to your lunch every day?

Both will likely have a similar outcome; but one is fueled by a harmful, unsustainable, short-term goal while the other is a habit that will improve your health.

Do you think your app will have more monthly active users if you launch it by a certain date or if you set aside time to make improvements every single day?

Creating a system for continuous improvement is a lot more likely to make your app successful than simply achieving a short-term goal within an arbitrary timeline is.

Yet, I still don’t think all goals are evil. In fact, I believe they’re important for defining where you want to end up. But processes, systems, and habits will create the roadmap you need to get there.

Goals have an expiration date. Systems are forever.

I’ll be the first to admit we have goals at JotForm. As a business that needs to grow, we have specific success metrics — which is just another term for goals — to meet.

But where our real achievement lies is in developing fail-safe systems that allow us to achieve long-term goals in a way that is sustainable and repeatable.

I want to share three real-life strategies that have helped me to build systems I used to grow JotForm to over 5 million users.

1. Big Hairy Project (BHP)

You’ve heard of businesses having a BHG or “Big Hairy Goal.” But what about a BHP?

One of the most common mistakes that runs businesses into the ground is trying to accomplish too many things at once. Even great systems fail when they’re overloaded.

I’m not talking about unrealistic, short-sighted, and dangerous goals that burn out your employees and leave you feeling empty and adrift.

I’m talking about those game-changing, make-or-break projects that set you apart. They’re why in 2020 we spent 326 days on our most user-driven BHP ever — JotForm Cards.

We thought about what forms might look like a decade from now. We performed multiple week-long hackathons. We went back to the drawing board more than once.

We were able to pull this off because of the systems that we’d baked into our culture over the years; including Demo Days, regular releases, and other tactics I’ll get into later.

Especially when you’re just starting out, focusing on one project at a time allows you to develop systems to complete it successfully. And once that good habit is in place, it will carry over to future projects.

Thinking about one thing at a time instead of everything all the time will also increase your ability to make well-informed, project-oriented decisions.

We know that constraints breed creativity. A well-defined BHP can cut down on rework and help align people.

How to choose the right Big Hairy Project

At JotForm, I usually give myself three months to choose our Big Hairy Project.

During those three months, I discuss possible BHPs with our team, interview our users, run option analysis, and give my thoughts time to crystalize until the best contender becomes obvious.

Once we decide on a BHP, it’s time to figure out what milestones will get us there in a year’s time.

The systems that we already have in place work for us as a team instead of being tied to specific outcomes. I feel comfortable knowing that when we follow them, they will help us achieve the results we want — no matter how different those might be from years past.

I regularly have to shoot down great ideas simply because they don’t align with the BHP.

At times it’s tough to be ruthless, but I stick to this system because it’s one that has led me through many business breakthroughs since I started JotForm as a side gig over 13 years ago.

2. Always be shipping

We have a habit of releasing an update to JotForm every single day.

This is one of the systems that makes it possible to keep a team of over 150 employees in different parts of the world all working toward the same BHP.

And not only does it prove to our users that we care about making our product better for them, it forces us to stay out of the weeds and focus on what we should be doing instead of what we could be doing.

Shipping every day gives us tons of chances to conduct A/B testing. We can quickly see what users love and what they wish we would just leave the heck alone.

This iterative, agile system reflects the way we operate as a business, too.

Instead of locking our engineers in a dark room for six months and just hoping users like what we spit out, we’re finding out what they like and don’t like on a regular basis.

One of the most satisfying aspects of daily releases is that after a few months, we’ve suddenly built a whole new product or feature.

There’s no disappointment that we didn’t hit an arbitrary launch date, we don’t spend months on quality assurance testing, and we don’t suffer from anticlimactic adoption rates when it turns out our customers don’t actually like what we’ve been working on.

Our shipping system protects us against the business challenges other software companies regularly struggle with.

“Shipping helps you take your theories in front of your audience, helps you get valuable feedback that can be used to test your assumptions. In the worst case it confirms that your hypothesis was incorrect.

Shipping also forces us to examine some of the minor use-cases we had ignored at the design stage. It gives us a sense of accomplishment. It keeps teams focused on the problem statement. Shipping solves business problems and provides value to users.” — Dinesh Vernekar

3. Demo Days

E very once in a while, the whole JotForm team spills from their offices at the same time. They gather in a single room. The air crackles with energy.

No, it’s not the Hunger Games. It’s Demo Day.

Richard Feynman is credited for developing the concept that if you can’t explain something simply, you don’t fully understand it.

Demo days give us the opportunity of explaining what we’re working on to a room full of diverse people is an excellent opportunity to develop a deeper understanding of 1) what we’re doing, 2) why it matters, and 3) how each team has an integral role in our overall success.

Demo Days do more than provide a fun excuse to knock off work and talk about our wins, they also provide a chance to really practice some of the building blocks of our company culture: transparency, accountability, and autonomy.

The JotForm leadership team also takes this chance to check the pulse of progress and enthusiasm toward the BHP. We can provide course correction without breathing down anyone’s neck.

Businesses and people do not fail because they are bad. They fail because their systems for success are poorly devised. Or worse — they’re nonexistent.

When businesses and people aim to achieve short-term goals, they often end up unfulfilled and lost in a tailspin of seeking the next temporary fix.

Goals are simply intangible plans. The systems you develop to fulfill them make your results teachable, repeatable, and best of all — lasting.

As James Clear put it perfectly:

“Goals can provide direction and even push you forward in the short-term, but eventually a well-designed system will always win. Having a system is what matters. Committing to the process is what makes the difference.” — James Clear

At JotForm, we take our eyes off short-term prizes to focus them instead on long-term systems that lead to strong outcomes.

What about you? What are the systems that have helped you?

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