Types of Binary Bets – One Touch

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Types of Binary Bets – One Touch

The Touch binary option trade is one of the binary option trades in the Touch/No Touch category. Touch is based on if the price action of the traded asset touches a price barrier before the expiration of the trade.

A “One Touch” binary option is a trade type where the trader purchases an option that will deliver profit if the market price of the asset purchased touches the set target price at least once before the expiry of the date.

If we look at the chart below, this shows an example of a One Touch trade on the trading platform of Betonmarkets, one of the binary options brokers that offer this trade variety.

We can see here that the financial asset is spot gold, to be purchased at a spot price of 1570.95. The price barrier (which can be adjusted by the trader) has been set in this example to 1599.33. The payout for this trade, including the original capital is $200. For us to trade the One Touch, we have to buy the bet at a price of $120.60, and set the expiration to 7 days (which is the minimum expiration time Betonmarkets allows on their platform). This gives a profit of roughly 40% if the trade is a winner.

Now notice a few things. The profit payout is only 40%, which in binary options terms, is nowhere near the maximum payout of 80 – 85%. The reason for this is that our price barrier is quite close to the current market price. As a rule, the closer the price barrier to the market price, the lesser the payout the trade will give.

Let us look at a live trade example of gold, done on 19 th October 2020. The trade was a Touch trade, aiming to predict that the price of gold would hit $1690 an ounce before the 7-day expiration on Betonmarkets.

At the time of the trade, gold was at $1649 an ounce. The fact that our price barrier of $1690 was far from the market price meant that the trade only cost $45.59, expecting a total payout (capital + profit) of $100 from the trade.

By day 2, the price of gold had begun to drop, and even went as low as $1603 an ounce, sending the trade down. A reverse head and shoulders pattern developed on day 3, causing a remarkable spike on the 4 th day that sent the trade into winning territory for the payout.

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This trade was not perfect, and was made with a fundamental view. If we had paid more attention to the technical aspects of this trade, this would have increased the payout dramatically.

This is one way to play the markets.

How to Trade the “One Touch” Binary Option

This is simple if you know what you are doing. All it requires is one touch for you to have money in the bank. But the key questions are:

– What price barrier do you set to allow the trade make that single touch?

– How far should you set the price barrier to enable the best possible payout without setting the target too far out?

– What expiration time do you use?

The first thing to realise is that the touch you need could be in any direction, bullish or bearish. You must carry out proper technical and fundamental analysis to determine which direction the market is most likely to end up. This will enable you set the correct barrier. In our example, the fundamentals were pointing to renewed safe haven purchases of gold as a result of the Eurozone crisis; a trade call which turned out to be correct.

Secondly, tweak the barrier prices. Binary options platforms are set to allow you know what the trade costs and payouts will be. That way, you can strike a good balance between costs and payouts.

Thirdly, platforms like Betonmarkets have a default minimum of 7 days. This is a reasonable time to give a trade to make the target. All it takes is one touch. Even if the market reverses thereafter, you have achieved your target and by the 7 th day, you will get paid.

So trade the One Touch and make your money using these strategies.

Types of Binary Bets – One Touch

Types of Binary Bets – One Touch! The Touch binary option trade is one of the binary option trades in the Touch/No Touch category. Touch is based on if the price action of the traded asset touches a price barrier before the expiration of the trade.

A “One Touch” binary option is a trade type where the trader purchases an option that will deliver profit if the market price of the asset purchased touches the set target price at least once before the expiry of the date.

Many of the binary options brokers offer One Touch trade option.

We can see here that the financial asset is spot gold, to be purchased at a spot price of 1570.95. The price barrier (which can be adjusted by the trader) has been set in this example to 1599.33. The payout for this trade, including the original capital is $200. For us to trade the One Touch, we have to buy the bet at a price of $120.60, and set the expiration to 7 days. This gives a profit of roughly 40% if the trade is a winner.

Now notice a few things. The profit payout is only 40%, which in binary options terms, is nowhere near the maximum payout of 80 – 85%. The reason for this is that our price barrier is quite close to the current market price. As a rule, the closer the price barrier to the market price, the lesser the payout the trade will give.

Let us look at a live trade example of gold, done on 19 th October 2020. The trade was a Touch trade, aiming to predict that the price of gold would hit $1690 an ounce before the 7-day expiration. Types of Binary Bets – One Touch

At the time of the trade, gold was at $1649 an ounce. The fact that our price barrier of $1690 was far from the market price meant that the trade only cost $45.59, expecting a total payout (capital + profit) of $100 from the trade.

By day 2, the price of gold had begun to drop, and even went as low as $1603 an ounce, sending the trade down. A reverse head and shoulders pattern developed on day 3, causing a remarkable spike on the 4 th day that sent the trade into winning territory for the payout.

This trade was not perfect, and was made with a fundamental view. If we had paid more attention to the technical aspects of this trade, this would have increased the payout dramatically. Types of Binary Bets – One Touch

This is one way to play the markets.

How to Trade the “One Touch” Binary Option

This is simple if you know what you are doing. All it requires is one touch for you to have money in the bank. But the key questions are:

– What price barrier do you set to allow the trade make that single touch?

– How far should you set the price barrier to enable the best possible payout without setting the target too far out?

– What expiration time do you use?

The first thing to realise is that the touch you need could be in any direction, bullish or bearish. You must carry out proper technical and fundamental analysis to determine which direction the market is most likely to end up. This will enable you set the correct barrier. In our example, the fundamentals were pointing to renewed safe haven purchases of gold as a result of the Eurozone crisis; a trade call which turned out to be correct. Types of Binary Bets – One Touch

Secondly, tweak the barrier prices. Binary options platforms are set to allow you know what the trade costs and payouts will be. That way, you can strike a good balance between costs and payouts.

Thirdly, some trading platforms have a default minimum of 7 days. This is a reasonable time to give a trade to make the target. All it takes is one touch. Even if the market reverses thereafter, you have achieved your target and by the 7 th day, you will get paid.

Types of Binary Options

Binary options are trades with a fixed risk and reward. When you win a binary trade, you receive either a fixed amount of cash or a fixed amount of an underlying financial instrument. While this is true of all binary options, there are a number of variations on this theme, all of which have different conditions. What are the basic types of binary options you’re likely to encounter as you start learning how to trade?

Types of Binary Payouts

There are different ways you can categorize binary options; one way to do so is according to payout. There are two ways you can receive your payment: cash or an underlying financial instrument. “Cash or nothing” is the name of the first type of payout, while “asset or nothing” is the name of the second kind. With these types of options, if you lose your trade, you “receive nothing.” When you see this phrase, however, don’t make the mistake of taking it too literally—it should read that you “receive nothing and forfeit your investment.”

American vs. European Style Binary Options

You may also choose to classify binary options into American- and trades. With the trades, options may be exercised immediately once the asset reaches the predetermined strike price. So while the binary trade will still have a maturity date, you don’t have to wait for the asset to reach the strike price at the maturity period—you win as long as it does so before or at the expiration time. trades on the other hand do not allow you to profit unless the asset hits the strike price (or passes it in the direction you wagered) at the proper moment; if the asset hits the strike price before the maturity period is up but the trade reverses on you when the period expires, you still lose.

Common Types of Binary Options

Four other types of trades you need to learn about are referred to as One Touch, No Touch, Double One Touch, and Double No Touch. “Touch” in these names refers to the underlying asset touching the strike price, which you may also hear referred to as a “trigger.” As you might deduce, the names refer to the conditions under which you might win a binary options trade.

One Touch and No Touch

One Touch is the most basic of all these types of trades—it’s exactly what we’ve been talking about to this point. If the asset touches the strike price value a single time within the specified window, you win your trade. When you enter a No Touch trade, you’re wagering the exact opposite. Instead of betting that the asset will touch a certain strike price, you’re wagering that it will not touch a certain strike price. If within the specified time window price does not touch the price you indicated, you win the trade.

This might make you think, “Why not just pick a strike price that’s ridiculously far away from the current price and which is incredibly unlikely to ever be reached?” The reason this won’t work is that the payoff will be ridiculously low for such a bet, and will not be enough to make your trade worthwhile—you still have to pay the spread, and it won’t make up for it.

Double One Touch and Double No Touch

Double One Touch you can think of as a trade where you’re hedging your bets. You choose two different strike prices in this scenario. If either strike price is reached during the expiration period, you win your trade. You might use this method when you expect price to break out but you aren’t sure in which direction. You could place a strike price on either side of the current price and see which way it goes. If price consolidates instead of hitting one of your targets, then you will lose your trade. If you place your strike prices ridiculously close to the current price, your payoff will be too small to justify your trade—again, there’s no cheating the system. No broker is going to pay you for making a bet on something which is more or less inevitable.

Double No Touch is another type of trade in which you choose two strike prices, only this time you’re betting that price will touch neither of the two values you set. If either value is touched during the specified time period, you lose your trade. If neither strike price is touched, then you win your trade. When would you choose a binary trade like this? One application might be during a time period when you believe that price is consolidating and isn’t going to be trending much above or below its current value. Traditionally it’s tough for traders to profit during consolidation (which tends to be a lot of what goes on in any market), but this is one way you could potentially do it.

Now you should feel more familiar with the types of binary options that are out there. This is by no means an exhaustive list, however, since there are many other ways in which it is possible to vary the conditions under which you trade. For example, the simplest type of trade might be one in which you double your investment if you win a trade or lose 100 percent of it if you don’t. But you could also enter into a trade where you win or lose a certain percentage of your investment.

Any variation on the type of binary option or the way in which you manage your money demands to be tested thoroughly before you start trading live with your own money. So when you’re backtesting and demo testing new methods of trading, try out some different types of binary trades as well, and understand that every time you vary the conditions under which you trade, you will have an impact on whether or not you’re going to be profitable—even using the same method. So different types of trades call for different methodologies. You may need to tweak your system for every type of trade you make, even if one method has the potential to work for multiple types of binary options.

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