Ever since their inception, about six years ago, binary options have been the centre of much controversy especially around whether they are nothing more than mere gambling or if they are rightly regarded in certain jurisdictions as a proper financial investment vehicle. Although there are valid arguments on both sides of the debate, one could also comfortably argue that it makes little difference to an interested client what terminology or labeling is applied to the transaction, for as long as the trade ends in the money and the profits pour in. Therefore, keen to capitalize on the fact that the simplicity of binary options trading renders it far more comprehensible and thus appealing to a far wider audience of potential clients than forex or any other form of online retail investing, binary options brokers have made sure to develop and put at the disposal of the different types of traders a wide variety of option types, especially when it comes to their duration, i.e. expiry time, in order to make it possible for everyone to be able to find a suitable type of binary option to want to place a trade on.
The effort by the major players in the online retail binary options industry therefore is to appeal to and attract both those who view binary options trading as a more sophisticated or less sinister form of gambling and wish to bet on them for entertainment, recreational purposes or for trying out their luck and making some quick cash, as well as those who are convinced that indeed they are a valid form of an investment and are thus more interested in a more long-term engagement into binary options. Obviously, the two extremes, in terms of audiences, are being targeted using different methods and techniques with the final aim being the increase of the client base of each broker and of binary options in general across the whole spectrum of the market.
Binary options which are traded at extremely short expiry times, ranging from just 15 seconds to a top span of five minutes are those which are aimed to more entertainment minded traders, those who are perhaps simply prepared to have a casual engagement with binary options trading or view it in opportunistic manner. However, many argue that at such sort expiry times what these people engage in can hardly be called trading and it is definitely not investing, but rather capitalizing on the noise of a particular moment in time.
For those already accustomed to forex trading or who at least have a basic understanding of how it works, it is relieving to identify that most typical binary options are similar in length to most forex trades, with durations between thirty minutes or an hour to expiries at the end of the day. Such durations make the identification of trends, low and high points as well as resistance levels far easier, rendering binary options the most suitable for traders who prefer to rely on technical analysis or event trading.
Clearly, from the menu of binary options trading types available those which better fit the profile of an investment and thus are more appealing to committed, serious investors, be they individuals or institutions, are the binary options with long term expiry times, i.e. the weekly, monthly and quarterly ones, which have the added benefit of coming of coming with a quite high payout, when compared to other investment types of such a duration. However, traders should bear in mind that there is also a downside to these options, which comes in the shape of the tangible risk of losing all the amount you traded if the trade expires out of the money, coupled with the fact that your funds are tied up for the entire duration of the option. Having said that risks are significantly reduced if a longer duration trade is placed after careful analysis and preparation, rendering such types of binary options trading the most suitable for serious investors who are in it for the long run.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.