What are 60-second Binary Options? – Definition and examples
The 60-second binary options trade is one of the trade types that first debuted on the SpotOption white-label platform, finally making its way to the Tech Financials white-label platforms in 2012. It is a type of Call/Put option trade that has an expiry of 60 seconds. The trader is taking a position on whether the asset will end higher or lower than the market price by the time the trade ends in 60 seconds.
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There are three possibilities in terms of trade outcomes with the 60 second trade:
- The trade can end up IN THE MONEY, which is a profitable outcome for the trader. All that needs to happen to make this a reality is for the asset to end in the trader’s predicted side of the trade by just one pip.
- The trade can end up OUT OF THE MONEY, which is a losing outcome for the trader. If the asset dips into the side of the trade opposite the trader’s bet by just one pip, then the trade ends up as a loser.
- The trade can end up AT THE MONEY, which is what happens if the asset ends on the same price level as it started the trade. This is a possibility as a result of the short expiry time of the trade, and unless an asset is in a massively volatile period, the price action generally ticks around a few pips range.
Trading the 60 Second Binary Option
This option is found on the binary options platform of brokers who use the white-label solutions from SpotOption and Tech Financials. If you have a brokerage account with any of these brokers, simply do the following to engage the trade:
- Select the asset to trade. Any asset from the asset classes will suffice.
- Enter the amount to be invested in the trade.
- Is the asset going to end above the market price (CALL) or below the market price (PUT)? This is where you make your choice.
- Execute the trade using the appropriate button.
Success with the 60 second binary option is enhanced when prices are very volatile. These conditions exist at the following times:
- During news trades of a high-impact nature. Due to the fact that most traders would be in a particular direction during such trades, and brokers would only permit trades on volumes that they can match, you probably have to be in the trade very early. If you do not have access to an ultra-low latency news feed, then you are better off staying away from this trade.
- When there is extreme market volatility triggered by a systemic market activity.
- During the first few minutes of market open. This refers specifically to trades on stocks and stock indices. The Japanese stock index (Nikkei 225) mirrors the performance of the US indices, so you can use the close of the US markets to gauge the market sentiment during the first few minutes of the market trade in the Japanese index.
- If you have access to a technical setup that uses ultra-short acting moving averages, you could use this for a successful trade. Such a system would really have to be very good indeed, and the trader has to trade off the 1minute chart.
Controversy surrounding the 60 Second Option
The controversy surrounding this trade is the reports of market price manipulations by brokers who tilt the scale against the trader by manual adjustments of the expiry price. This is more likely to occur if the price is at breakeven point at 59 seconds.
The trade in itself is extremely speculative and there is really no valid method of analysis that can detect enough pattern of repetitiveness in a one-minute period to be able to pull off successful trades repeatedly.
To be successful at the 60 second option goes beyond correctly predicting the trade direction. It will take good money management. Traders who suffer up to 3 repetitive losses will be sorely tempted to employ a martingale technique to recoup losses. This is a bad gamble which could easily bring a lot of hurt to a trader’s account.
All told, common sense and some element of good luck will help traders to trade the 60 second option with a measure of success.