How Useful Are Double Up, Rollover, and Early Closure?

Three of the most common trading tools provided by binary options online brokers are double up, rollover, and early closure. These tools allow you to maintain some level of control over your trades while they are open. When binary options online brokers do not provide these tools, your trades are literally out of your hands until they expire. Brokers that do offer them are giving you the chance to make decisions about your trades. But how useful are they? Which of these tools is the most important?

Double Up

Double up is a tool which allows you to double your investment. Your trade stays open the same length of time it originally was going to; your expiry does not change. All that changes is your risk and your potential reward. Let’s say for example that you decided to invest $10 on GBP/JPY, and you clicked “Buy.” Your High/Low trade is set to expire shortly, and you have every confidence that GBP/JPY will only continue to rise. At this point, you could click “double up” to invest $20 on GBP/JPY. The trade will expire at the same time in the same direction. If you win, you get the payout for a $20 investment instead of the payout for a $10 investment.

There is a catch, of course. Not all brokers handle doubling up exactly the same way, but generally, when you choose to double up, your broker will move the entry rate to the current rate at the time you clicked “Double Up.” If your GBP/JPY trade were to fall below that rate at the expiry time, you would lose your trade, even if the position closed above your original entry rate. If that were to happen, you would end up losing a trade you originally would have won, and you would lose twice as much on the investment.

For that reason, you have to be incredibly sure of what you are doing when you use double up. It is not enough for the current price to be far above/below the original entry price. It needs to be moving steadily in the direction you are betting on, because only the new entry rate will matter when the win or loss is calculated. Double up can be useful, but only in these limited situations.

Rollover

Rollover is another potentially useful feature which can add to your reward—but also to your risk. When you use rollover, you extend the actual expiry time of your trade. This is not an easy way to get out of losing a trade you think you might win if you stay in longer, though! In that sense, it is very different from extending a Forex trade (if you are familiar with FX trading, you know what I am talking about). Deciding to stay in the trade increases your risk, because you are required to add to your investment. Thirty percent is a typical amount of increased risk which a broker may require to rollover a trade.

When would you use this feature? You would not want to use it if a trade has turned totally against you. If you have a good cause to believe that there is a really substantial chance that extending the expiry will result in a win, you might want to use it—but you would have to be pretty certain, because otherwise you will simply lose more money. If you do win, awesome—you have won an additional 30% on top of your original investment. But if you lose, you lose more than you planned to wager.

You might want to use it if you are already winning a trade, but most brokers do not allow you to do this. They will only let you rollover your trade if it is not in the money at the time that you click “rollover.” Because of this, it is generally a risky move, and not the most useful tool you are going to find. If you test a strategy where rollover is useful, you may find it advantageous now and again. Otherwise, though, you may simply want to avoid it, as it will mess up your money management plan. Rollover is perhaps the least useful of these three tools.

Early Closure

Early closure allows you to get out of a binary options online trade before the trade expires in return for a partial win or loss. Keep in mind that some brokers limit when you can use early closure; they may only let you use it in the money or out of the money. So be sure to check so you understand how your own broker allows you to use this tool.

The value of early closure cannot be overstated here. Imagine you are in a winning trade, but you expect the trend to reverse. You can use early closure to get out before the trade goes against you. A partial win is better than a loss. Or imagine you are already in a losing trade, and you now know that there is no way the trade is going to go in your favor. Early closure can help you to curb your losses. A partial loss is better than a full loss!

This is the only tool on this list that does not increase your risk exposure, and that is significant! The other tools here all force you to assume added risk in the hope of forestalling disaster. Early closure is the most conservative strategy for managing your open trades when things are not going as you expect. That does not mean it is always the best choice, but more often than not, you will likely find that it is. On the whole, that makes early closure the most useful tool listed here. If you were trying to decide between a broker which offered early closure and one which offered double up and rollover, you would be better served by the first.

Making the Best Use of Early Closure, Double Up, and Rollover

Let’s consider an example of a situation you could find yourself in where you might have to decide between one of these tools to manage your trade. Going back to our example with GBP/JPY, let’s say you clicked “Buy” and your trade has 20 minutes to go before the expiry time. Your trade is currently at a loss. What should you do?

You have three options:

1. You could remain in your trade and not do a thing, waiting patiently for it to expire.
2. You could use rollover in the hopes that the trade will come back to a winning position given enough additional time.
3. You could close out early at a partial loss.

If you have evaluated these options, you have noticed that each carries pros and cons. If you choose the first option, you could win or lose your full investment depending on what happens. If you choose the second option, you may give yourself a better chance of winning, but your loss will be greater if the trade does not turn around. If you close out early, you do lose, but at least you do not lose the full investment.

To know which to choose, you have to know why the market is behaving the way it is. One good rule is to ask yourself whether the basis for the trade still exists. If the answer is “yes,” it may be logical to remain in the trade or even use rollover. If the answer is “no,” use early closure and get out.

Here is another example. Let’s say that you hit “Buy” on GBP/JPY again, and this time you are winning. The expiry time is 15 minutes away. Here are your options:

1. You could remain in your trade and not do a thing, waiting patiently for it to expire.
2. You could use rollover (if available) in the hopes that the trade will continue to be a winner given a longer expiry time. This would give you an added 30%.
3. You could use double up if you are confident that the strong up trend will continue from your current price level.
4. You could use early close and get out at a partial profit.

Which makes the most sense? In most cases, the first choice is probably the best, but options 2 and 3 may make sense given the right situation and enough confidence. Rollover would be smarter and more conservative than double up, but this is precisely why most brokers will not let you do it if you are in the money. When would you use early closure? You would use early closure while winning if you saw signs that the market was about to turn against you. Again, a partial profit is better than a loss.

Ultimately it is up to you to test each of these tools with your binary options online strategies. That is the only way to know how they will perform, and you need to do it in real time to really get a feel for it. So demo test and record your results. Take careful notes about the situations which prompted you to use double up, rollover or early closure, and the results. What would have happened if you had done something different, or done nothing at all? Did the tool help you save money or make money? Did it cost you?

Eventually you will be able to establish patterns, and these will help you figure out how to make the best use of double up, rollover, and early closure in your binary options online trading. While you are shopping for binary options online brokers, look for a broker that offers all three. If you do have to pick and choose, though, remember that early closure is the best tool for controlling your risk!

 

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