What is “Rollover” in Binary Options?
You may notice that some binary options brokers allow you to use a feature called “rollover” in your trading. A related feature is called “double up.” These features, when used intelligently, may help you to increase your winnings if a trade is going in your favor. Used without careful thought, they can help you lose money faster. Let’s take a look at how they work and when it is appropriate to use them.
How Rollover In Binary Options Work
Let’s say you’re in a binary options trade, and it’s going to expire in an hour. You notice that the asset you’re invested in is now starting to trend, and you see no reason that the trend is likely to stop. If you were trading Forex, you could add to your position. The equivalent of adding to your position in binary options trading is to select the rollover or double up option. With rollover, you extend your expiry time. You’ll be asked to add a certain percentage to your investment. So you might invest an additional 30% of what you already are wagering and that will extend the expiry time by a certain amount. If the financial instrument expires in the money at the end of that period, you win more money. If it expires out of the money at the end of that period, you lose more money.
Doubling up is a similar concept. It’s exactly what it sounds like. You double your investment. So you can either win money twice as fast or lose money twice as fast—it all depends on whether the trade goes in your favor or against you. How do you figure out whether you should double up, use the rollover feature, or stick with the investment you’ve already made?
This is just one of many aspects of trading which you need to test before you decide to do it live. It’s a question of money management—how you decide what to invest on each trade. For some traders, it’s simplest to avoid rollover or doubling up; this makes the amount of money you invest consistent every trade. Other traders excel by using these features however—it makes sense to take advantage of a good situation when things are moving in your favor. You need to be confident that they truly are moving your favor however—learning how to really recognize these situations is a matter of practice. Try practicing on historical data and then demo testing before you decide on whether to make use of these features or not. Different methods call for different techniques, and different personalities are suited by different money management styles. The only way to find out what’s best for you is to test.