The derivative transactions always have a fixed lifetime. When you open a fixed-time derivative for the amount and expected market direction, you must specify the time at which the trade expires. At Olymp Trade the minimum derivative’s duration is one minute. But you have to keep in mind that there are two ways on the platform to set expiration.
In this article, I will explain in detail what these two ways are and in what situations you can use them.
Key Takeaways🔑
| →Derivative transactions have a fixed lifetime and can be set to expire after a specific duration or at a specific time. |
| →Choosing the right expiration setting depends on your trading strategy and personal preferences. |
| →Olymp Trade offers a demo account to test different expiration settings and trading strategies before using real money. |
Contents
The specified period of time after which the derivative expires
When you want to open derivative trade, the platform allows you first to select a specific period of time after which it will expire. You can choose this time from the drop-down list or manually enter how many minutes the trade should last. The trade will last for the exact amount of time you have set. This time is counted precisely from the moment the transaction is opened.
In the picture below, notice that the transaction opened for one minute at 15:54:12.240 expired at exactly 15:55:12.240.
This type of expiration date can be helpful if you want to use, for example, the candle color strategy we have described. We use five-minute candles there. To cover the duration of one 5-minute candle for a trade, you need to open the trade as soon as a new candle appears.
Setting around time for the trade to expire
Sometimes we just want to close the deal at a certain time. Then, when selecting the expiry time, select “Expiration” and enter the specific time. The pictures below show this action.
A transaction opened at any time will then be closed at the exact time you have previously specified. It is therefore independent of the opening time.
You can use this type of expiration in the strategy described by us in the article: The Easy Way to Trade Candles at Olymp Trade.
Pros and Cons of Fixed-Time Derivative Expirations📊
Pros:
- 🎯 Allows for greater control over trade durations
- 🔍 Enables traders to tailor their strategies to specific market conditions
- ⏰ Helps minimize the impact of sudden market fluctuations on trade outcomes
Cons:
- 🤔 Can be confusing for beginners to select the right expiration setting
- ⚠️ Potential for losses if the wrong expiration setting is chosen
- 📈 May require constant monitoring to optimize trade durations based on market changes
Fixed-Time Derivative Expirations: Duration vs. Specific Time⌛
| Duration Expiration | Specific Time Expiration |
|---|---|
| Trade expires after a specified duration from the moment the transaction is opened. | Trade expires at an exact, pre-defined time, regardless of when the transaction was opened. |
| Ideal for strategies that rely on specific time intervals, such as the candle color strategy. | Suitable for strategies that focus on specific market times, such as the Easy Way to Trade Candles strategy. |
| Requires close monitoring to ensure trades are opened at the beginning of a new candle or time interval. | Less dependent on the exact opening time of a trade, allowing for more flexibility. |
Which method to choose?
As always, everything depends on many different factors. Here, above all, it depends on the strategy you use. Earlier, I have indicated 2 different strategies for two different expiration modes.
If you already have a strategy, simply choose the termination method that fits better. If in doubt, remember that at Olymp Trade you can always test everything using the virtual funds in your demo account.
All the best!
Common Questions About Fixed-Time Derivative Expirations💡
- Q: How do I choose the right expiration setting for my strategy?A: Test different expiration settings using a demo account to see which one works best for your chosen strategy.
- Q: Can I change the expiration setting of an open trade?A: No, once a trade is opened, the expiration setting cannot be modified.
- Q: What happens if the market suddenly changes before my trade expires?A: The outcome of your trade will still depend on the market conditions at the time of expiration, regardless of any sudden market fluctuations.
- Q: How can I minimize losses when using fixed-time derivatives?A: Always perform thorough research and analysis before opening a trade, and consider using risk management tools like stop-loss orders.
- Q: Are fixed-time derivatives suitable for long-term investments?A: Fixed-time derivatives are typically more suited for short-term trading strategies, but they can be used in longer-term strategies if carefully planned and managed.