If you are getting into trading binary options and want to try something a little more interesting than the standard High/Low trades, you may want to check into One Touch options. What is a One Touch option? A One Touch option is a directional trade where you start out with price at a certain level, and then you make a wager that price will touch a given trigger value within the expiry period of the trade. One Touch trades may involve wagers on price rising or falling. It all depends on where the trigger value is. The opposite of a One Touch option would be a “No Touch” trade, where you wager that price will not hit a certain value by a certain time.
Here is an example of a One Touch trade.
Maybe you have been keeping your eye on a certain stock, and you believe that the price of that stock will be rising today based on what your indicators are telling you. You look on your binary options platform to see if any trades are being offered on that stock today. You see that there is a One Touch trade where you can wager that the stock will rise to a certain price level within the next hour. Since you believe that the stock will indeed touch that value within the hour, you enter into the trade, wagering the amount of money that you are willing to risk.
You wait through the hour to see whether you will win your trade or not. If at any point during that hour, price hits the value you wagered, you win your trade. That is why its called a “One Touch” trade. There is a single point, and it only has to touch it once for you to win. You win whether it does so in the first 60 seconds of your trade or in the final minute. It does not matter, as long as it hits that value. If you believe that the trade is turning against you and you want to get out without losing money, you may be able to use early closure, depending on whether you are trading with a broker which offers you that capability.
One of the attractive aspects of One Touch trades is that they often include substantially higher payout values than High/Low trades. Your typical High/Low trade will offer an average payout of around 75%. A One Touch trade however may offer a much higher payout. The payout might range from 200-500%. That means that you can win up to five times the amount of your initial investment. Each broker has its own policy on refunds, but odds are you will also get the same refund. It is hard to say no to the possibility of winning more money while risking no more than usual. One Touch trades are very appealing for this reason; just make sure that your entry criteria are all in place before you enter a wager, and that the temptation of riches does not lead you into making poor trading decisions.
Where can you trade One Touch options?
One Touch options are quite common. After High/Low trades, they are probably the most common type of binary options out there. For whatever reason, No Touch trades are much harder to find. Not too many binary options brokers have implemented them yet into their offerings, probably because they have yet to be programmed into the major white label platforms (like SpotOption) which power the majority of these binary options websites. Likewise, you are unlikely to find Double One Touch or Double No Touch or other variations on this theme just yet. We wouldn’t be surprised if these types of trades are offered to many different binary options websites in the coming years.
What should you know about One Touch trades before you start participating in them?
With One Touch trades, you need to pay careful attention to the direction of a trade, and you need to be pretty sure that you have spotted a directional trend. It is not enough to spot a breakout pattern. You need to also be pretty certain you know which direction that trend is going to go. Otherwise, if the new trend heads the opposite direction, you will lose your trade. Likewise, you need to be alert for price spikes and fakeouts in choppy markets. Market context is key in identifying a successful One Touch trade.
The expiry time is also very important. It is no good to spot a trend developing and enter into a One Touch trade with a 15-minute expiry time if you really do not expect price to rise or fall to the trigger value in question until an hour has elapsed. If you believed that price would be reached within an hour and saw a 1-hour One Touch option, then you would be smart to trade it. If however all you saw were 15-minute options, you would likely lose money on them because the expiry period does not meet your trading criteria.
That is the final thing to pay attention to when you are trading binary options. Always be sure you have a reason to place a trade, and that the rationale for the trade is based in something more than mere intuition. Trading may have an instinctive component, but long-term success involves planning, research, and testing, as well as systematic strategies and discipline. Some binary options trading methods are suited to One Touch trading, while others may work better for High/Low trades. Some systems are better for Boundary trades. If your system works well with One Touch trading, you are in luck; a lot of great brokers offer this type of trading!
Photo Credits: striding edge