By Darrell Martin
Trading five-minute binaries, you may have experienced difficulty with your orders getting filled as the result of the binary pricing moving so quickly.
Trading five-minute binary options is definitely fast-paced and if you’re not experienced with the binary options than using longer duration’s might be a better place to start initially.
It is easy to wait for expiration, because the time period is so short. Every 5 minutes there is another listing for a different set of strikes. If you want to exit a trade early, prior to expiration that is a choice but your likely going to miss hitting the bid or lifting the offer which will result in a resting limit order because the pricing moves fast.
The Five-minute binary opitons are only available in available for EUR/USD, GBP/USD, USD/JPY, and AUD/USD with five strike contracts offered for each pair.
The shorter time frames are great for those who want to see the results quickly meaning gains or losses. If lunch time is your only option to make time to trade, the 5 minute binary options will certainly give multiple trading choices within your lunch hour.
The key to remember that with the shorter time periods, the premium or discount differential between the underlying and the strike is now much smaller. If you are used to having a cushion with the long duration’s to lean on, that cushion is gone with 5 minute binary options where it can be wiped out in an instant. With the 5 minute binaries, the strike widths are much tighter to give better choices but you really need to be right on market direction.
The reasoning behind the binary pricing moving so quickly is due to the all or none settlement. If the binary outcome is still in question, a small movement of the underlying price can have much larger impact on the binary pricing because at expiration, you only need to be fractionally right for the binary to finish in the money.
It is possible to have success in the fast-moving five-minute binary option market. Have an expectation of what the market will do, be patient and do not force the trades. Be aware of the news. Wait for the right trades to happen. If the proper signals are not in place, do not take the trade. Know your system and follow the rules. Until you know your system, your strategy and comfortable with the binary mechanics then demo trade it. Invest the necessary time to learn the ins and outs of trading five-minute binary options.