The Rollover function in binary options trading is a risk management tool that allows you to extend the expiration time of an active transaction for an additional fee. On the platform Pocket Option this feature helps traders avoid losses in situations where a trade is not progressing according to forecast.
Statistics show that 67% of traders who use Rollover correctly increase the overall profitability of trading by 15-22%. However, improper use of this tool leads to increased losses.
Experts Trading academies recommend that you study the mechanism of Rollover before using it actively. Understanding the cost and optimal conditions of use helps to turn this function into an effective trading tool.
The mechanism of the Rollover function
Rollover is an opportunity to extend the expiration time of a binary option until its completion. The function becomes available 5-10 minutes before the expiration time and allows you to extend the duration of the transaction for a predetermined period.
When Rollover is activated, an additional amount is debited from the trading account, amounting to a certain percentage of the initial bid. These funds will not be refunded regardless of the outcome of the transaction.
Key Rollover Features:
- Available 5-10 minutes before the end of the option.
- The cost is 10-30% of the initial bid amount.
- The extension time is fixed and depends on the type of asset.
- It can be used only once for each transaction.
- Unavailable for turbo options with an expiration date of less than 5 minutes.
The system automatically calculates a new expiration time based on current market conditions. For currency pairs, the standard extension is 5-15 minutes, for stocks and commodities — 10-30 minutes.
Terms and restrictions of use
Pocket Option sets clear rules for using the Rollover feature. Understanding these limitations is critical for effective use of the tool.
Key Rollover Limitations:
- Unavailable for turbo options with an expiration date of less than 5 minutes.
- Does not work in the last 30 seconds before the option expires.
- The maximum cost is limited to 50% of the initial bid.
- Unavailable during the release of important economic news.
- Does not apply to the “One Touch” and “Range” options.
The Rollover cost is calculated dynamically based on current volatility, expiration time, and market conditions. During periods of high volatility, the price can increase significantly.
Effective application strategies
Successful use of Rollover requires an understanding of market conditions and the ability to assess the likelihood of a trend change. Experienced traders use this feature in specific situations.
Rollover works most effectively in situations of temporary correction against the main trend. If a trade was opened in the direction of a strong trend, but a short-term correction threatens a loss, additional time may allow the trend to recover.
Optimal conditions for using Rollover:
- The deal is open according to the main trend, but a temporary correction is developing.
- The price is approaching a significant support or resistance level.
- Technical indicators show signs of a reversal of the current movement.
- The size of the initial bid justifies the additional costs.
It is important to consider the ratio of potential profit to additional costs. If the cost of Rollover is 30% of the bid, and the potential profit is 80%, then the ratio remains favorable.
Situations where Rollover is not recommended:
- The deal is initially open against the main trend.
- Technical analysis does not confirm the probability of a reversal.
- The cost of the extension exceeds 40% of the original bid.
Cost and profitability calculation
Understanding Rollover’s pricing principles helps you make informed decisions about the use of the feature. The platform takes into account many factors when calculating the cost of an extension.
Factors affecting the cost of Rollover:
- The volatility of the asset at the current time.
- The remaining time until the initial expiration.
- Market liquidity for the selected asset.
- The amount of the initial bid.
An example of calculating profitability: the bid is $100, the potential profit is 85% ($85), the cost of the Rollover is 20% ($20). If the extension leads to a win, the total profit will be $65. If the deal ends in a loss, the total loss will be $120.
Psychological aspects of using
Rollover often becomes a source of emotional decisions, especially among novice traders. The desire to “save” a losing trade can lead to irrational use of the function.
Psychological principles of competent use:
- The decision on Rollover is made before the opening of the transaction as part of the trading plan.
- The function is used only if there are technical reasons for the reversal.
- The maximum limit of Rollover usage per day is set.
- Emotional decisions are excluded through strict rules of application.
Disciplined traders determine the criteria for using Rollover in advance and strictly follow these rules. A useful practice is to limit the number of uses to 2-3 times a day.
Practical usage example
The trader opened a “Higher” option on EUR/USD for 15 minutes at the price of 1.1050, predicting growth. 5 minutes before expiration, the price is at 1.1045, but technical analysis shows the formation of a reversal pattern.
Using a Rollover for 15% gives you an additional 10 minutes, the price is restored to 1.1055, and the deal closes in profit. The key success factor is the technical justification of the extension decision.
Conclusion
The Rollover function in Pocket Option is a useful risk management tool if applied correctly. The key to success is to use a function based on technical analysis rather than emotional impulses.
Understanding the pricing mechanism, limitations, and optimal application conditions helps turn Rollover into an effective complement to a trading strategy. It is important to remember that this is a tactical adjustment tool, not a way to correct incorrect trading decisions.
Community The Academy of Trading regularly analyzes the effectiveness of various risk management tools, including Rollover. The collective study of trading techniques helps participants improve the quality of trading solutions.
