How to close a binary options trade before expiration

When trading binary options, it is not always possible to accurately predict the nature of changes in quotes. In this case, losses arise that brokers do not compensate. However, some companies are ready to partially compensate for losses in such cases. This opportunity is available from some reliable binary options brokers when closing transactions early before the end of expiration .

Content:

• What is early closing in binary options;
• Pros and cons of early closing of transactions in binary options;
• Brokers with early closing of binary options transactions;
• Conclusion.

What is early closing in binary options

Closing binary options early is an additional option, using which a trader can exit a position before the expiration date. This operation is used to compensate for losses arising from an incorrect forecast when the price begins to move in the opposite direction from the chosen one. However, in such situations it is impossible to avoid losses. Only a portion of the transaction amount is returned to the account.

In the image below, the position amount was $100, and if you close the deal early, you can only get $50, and with every second this amount decreases by $1. Also note that there is a certain time during which a position can be closed early:

Some brokers allow you to close a deal in advance with a profit if quotes move in the desired direction. But in this case, the trader receives income, the amount of which is less than when the order is executed at the end of expiration.

There are other conditions that binary options brokers offer for transactions. They may depend on the time of the trading session . During the American session, the percentage of income from the transaction may be lower, so users may close orders earlier than the deadline. The amount credited to the account is determined in proportion to the time remaining until the order is automatically executed.

Most often, brokers offer early closure of transactions, regardless of the time of transactions. That is, it is possible to close an option earlier as part of trading in the American and European sessions. But the profit in this situation will be lower.

Pros and cons of closing trades early in binary options

Before using the discussed function in trading, it is recommended to consider its advantages and disadvantages. This is especially true for beginners who have not had time to develop the correct psychological approach and often commit rash actions.

The advantages of early closure include the following:

1. Reducing losses . The market is subject to fluctuations, that is, the direction of the trend can change under the influence of various factors at any time. This is especially true when working with turbo options, and thanks to this function, every trader can exit a position when the price turns sharply.
2. Volatility insurance . By trading on news or a sudden increase in volatility , you can avoid potential losses. In such conditions, you will return only a part of the amount involved in the transaction, but this is in any case better than losing everything.
3. Insurance against erroneous transactions . Due to the ease of placing orders, traders can press the wrong button and buy, for example, a Call option when they need a Put or vice versa. By taking advantage of this opportunity, it is possible to reduce the amount of losses that traders can receive in such situations.

The disadvantages include the following factors:

1. Profit return 50% or less . You can close a binary option before expiration, provided that the amount of funds returned back to the account is determined by the brokerage company and most often it is 50% or less. This parameter also depends on the expiration period remaining until the position is completed.
2. Limited time to close a deal . Companies place restrictions on this procedure. In particular, there is a specific time interval after which it is impossible to force a position to be closed.
3. Not suitable for turbo options . When using expirations of one minute or less, there is almost no point in using early closing trades, since you will get almost nothing back.

In addition to the factors described, not all brokers provide access to such a function.

Brokers with early closing of binary options transactions

At the moment, there are three binary options brokers that provide this opportunity. Each of them has different conditions for closing transactions, and then we will consider each in more detail.

Pocket Option

The Pocket Option broker allows you to close binary options transactions ahead of schedule and this can be done under the following conditions:

• the transaction must be completed with an expiration date of two minutes or more;
• 50 seconds are given for early closure;
• the trader can receive a maximum of 50% of the position amount back;
• every second the amount decreases;
• Turbo options are not allowed to be closed early (trades with expiration time of less than two minutes).

Quotex

Quotex broker provides this opportunity with other conditions:

• the transaction can be completed with any expiration;
• 30 seconds are given for early closing;
• the trader can receive a maximum of 37% of the position amount back;
• every second the amount decreases;
• Turbo options are allowed to be closed early.

Alpari

The Alpari broker also provides this opportunity. The company entered the market of Russia and the CIS countries more than 20 years ago, which proves the reliability of the services provided.

To complete a transaction ahead of schedule in the Alpari terminal, you need to click on the “Redeem” button, located in the tab with open orders, which is located in the upper right corner. According to the terms of cooperation, clients can receive no more than 50% of the investment. This parameter is calculated using a special algorithm and depends on the current price and time until the end of expiration. The given conditions are available for trading different types of options: “Higher/Lower”, “Touch” and others with an execution period from 30 seconds to 24 hours:

Conclusion

Thanks to early closing of transactions, you can:

• reduce losses from a potentially unprofitable transaction;
• reduce the amount of losses that arise when the forecast is incorrectly made (the price moves in the opposite direction);
• expand the variety of trading strategies.

Closing a position early in binary options is a useful feature that helps reduce losses. But before taking advantage of this opportunity, it is recommended to familiarize yourself with the broker’s terms of cooperation and test this operation on a demo account . This approach will also help you find a company offering a more favorable percentage.

See also:

Books on trading

Current bonuses and promotional codes

Binary options trading platforms

Psychology in trading - what does a beginner need to know?