Option Time Frame

This sub chapter normally should have been called options time horizon, not time frame, but based on the article written here I guess you will get the picture about what I really want to say.

From my point point of view the very notion of binary options should be associated with short/very short term trading. This can be done either trading setups on the one minute chart (which is quite a difficult task if you ask me as volatility is high and levels tend to be random as gaps are happening very often) or trading based on specific levels price/specific oscillator reaches. This approach will be treated in more details in this second part of our educational series when on the last sub chapter we will take a look at two of the most popular and important oscillators available: relative strength index and Williams regression.

That being said, the majority of binary options offered are on a short to very short term basis, referring to the intra day trader, or the scalper, usually the trader that doesn’t let one regular position on the spot currency markets opened to much.

However, depending on the time frame you are analyzing, and/or economic release or fundamental analysis you are doing, the time horizon to take into consideration may increase from case to case.

One example that comes to my mind is related to the recent talks about the tapering of the quantitative easing program in the United States and the possibility that the tapering of the program (or removing of the stimulus) should begin in September. So, taking that into consideration, one may decide to buy an option due to expire after the September FOMC meeting based on the assumptions presented above. This is fundamental analysis and the trader should use the analysis to actively trade financial markets.

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