Touch and no touch options are a great way for you to further customize your trading experience. Because there are only two different outcomes that can possibly occur, these are still considered to be binary options. You can be right or you can be wrong. There is no middle ground. Even though they are slightly different from the traditional call/put option, they are still a powerful tool that you can use to your advantage in the fast paced world of binary options trading.
Touch Options: What are they?
Touch and no touch options are not too complex. Basically, the broker that you are using assigns a price goal. If you choose touch, the asset must meet or surpass that assigned price sometime during the active minutes of the trade. If the price is reached or passed, the asset is said to have touched and if you chose the touch option, your trade would be profitable. If the price is not reached, the asset is said to have not touched and you will only be profitable if you chose the no touch choice. If you don’t understand the concept we suggest you take our binary options trading course online. This is naturally not something we charge you money for. We offer all our articles and services for free.
Touch Options: How to use Them?
To start off: You need a solid binary options trading education and definitely a binary options practise account if you are asking this question.
To answer: Touch/no touch binary options can play an important role in an experienced binary trader’s routine. They become especially useful during times of market volatility when prices might be uncertain. For example, if an asset’s price is wildly going up and down, you might have no clue about where the price will be a half of an hour from now, but you can say with a degree of certainty that the touch price will probably touched upon, even if it is for only a very brief moment. In instances like this, touch/no touch trades can be extremely powerful.
Touch No Touch Options: Why are they Important?
Imagine that you had complete control over your skills and only were looking for binary options highest payout. This is where customization and skills becomes so important when trading Touch Options. It’s impossible to have complete control, but the more that you can customize your trades, the closer you get. The higher the degree of customization you can exert over your trading, the closer that you will be to this above scenario and reach the No Touch Options skills needed to trade this instrument.
Touch or no touch options are just one more tool that you can use to help you customize your trading more specifically to your own needs. You might find these to be useful once in a while, seldom, or never at all. But regardless of how you use them, the fact remains that they allow you to control the trade in a small way that maybe you weren’t able to before.
How To Profit From Touch and No Touch Options?
You should always be very wary of a strategy that claims to have zero risk involved, but there are some that have less risk than others. The following strategies, what we call simply the “One Touch” method and “No Touch” method, have little risk, but that is not equal to no risk. These are a little tougher than some other types of trading methods to implement, but once you master the nuances of these strategies, they can be very helpful.
With both types, trade selection is key. Market news and an economic calendar can be used to pinpoint underlying assets that are likely or unlikely to be on the move in the near future. Many of the high-yield Touch trades are coupled with longer expiry times, often up to one week, which can make movement forecasting a tough task.
Knowing when and when not to trade can also be very helpful if you hope to profit from Touch and No Touch instruments. There will be times when market conditions are simply not optimal for entering into these types of contracts. When this is the case, consider other instruments which are more suitable. Half of the battle is in knowing when to be actively trading and when to take a break. Master this, and your profits will most definitely increase.
As with all trade types, analysis is a must. Fundamental analysis can be a bit of a challenge with longer expiry times, but an economic calendar can still be used to see what data will be released and when. Technical analysis will work well to show where the price has been, as well as what the potential is for future movement. Combine these two and you can generate some nice profits from Touch and No Touch style binary options trades.
One Touch Method
For example, with Touch, you must seek out an asset that is highly likely to be on the move once the trade goes live. Depending upon the space between the strike price and the target price, there may be the need for substantial movement. Some consideration will need to be given to the expiry time. Generally, the more time the better, as it can take some time for the actual price to cover enough ground to reach the target.
You want to find a touch price that is realistic and is being offered at moments of high volume. You can do this with any currency pair, but knowing which ones are going to be best at each time of day will be helpful. For example, if you are trading the EUR/USD pair, the world’s most highly traded pair, you should do it at the time when the European market hours overlap with U.S. market hours in order to increase volume.
You will be looking for a “realistic” one touch price, as mentioned above, but the term “realistic” is purposefully vague. To further narrow down the definition, you will want to look at a price chart for the pair. Do not go back too far in time, no more than to the beginning of the week, and identify resistance and support prices. If the target price is within this range, then it is a good trade.
Look for the longer timeframes if they are available, but do not stretch the expiry out more than to the end of the trading day. These are a lot of rules to follow, but there is a high probability of success if you stick to these guidelines.
No Touch Method
For No Touch, you’re searching for exactly the opposite. The key to success with the no touch options strategy is to find an asset that is moving sideways. Here, you want market conditions to be calm and for the asset price to not be at all volatile.
Stability is key with this type of binary options trade, so asset selection should include searching for an asset that traders are essentially ignoring at the time. The range that the asset is trading within should be a pretty tight one, although that isn’t absolutely necessary if the given price is beyond the range.
Next, look at the touch/no touch price that your broker supplies you with. You may find that your broker supplies you with a number of different prices. Ideally, you want a price that is above the current price, and not below. If the price is outside of the range, then you will begin to consider executing the trade.
This type of position should not be entered into when there is any chance that economic data or financial reports may cause too much price movement. The last big consideration is the expiry. In the case of this type of trade, closer is better. Shorter expiry times are best, as they provide a shorter amount of time for the asset price to touch the target.
One Touch Binary Options Hedging Method
Hedging with One Touch trades is slightly different than hedging with basic trades. With other trade types, hedging often involves the selection of opposing positions, with the goal being for one of the trades to finish in the money and provide some profit after the loss amount of the second trade has been subtracted. With touch trades, you’ll be counting on strong price movement in a single direction, so purchasing opposing positions would not make sense.
One Touch hedging involves purchasing two different positions, both with the price movement prediction that you have derived via analysis. They could both be upward touches, downward touches, or one of each. The selection must be made in accordance with the results of your analysis. Additionally, you must have been able to establish that strong price movement is forthcoming. The goal is the exact same as standard binary options hedging, for at least one of the two to finish in the money. However, you do run the risk of a dual loss, but could perhaps have both positions finish in the money.
An example of a one successful, one losing situation would be two positions that each offer 400% payouts. Assuming that the investment amount is $100 on each, one of the trades would pay $400 and the other would pay nothing. The total amount invested into the two trades would be $200. Once this amount has been subtracted from the $400 win, a net profit of $200* would be your earnings. Should both trades finish in the money, the profit amount would be $800. Should both finish out of the money, you’ve lost $200.
*Credited to your account after a successful trade.
Typically, hedging is going to carry less risk when it is executed along with standard binary options trades. Even so, it can certainly help with One Touch trades so long as your analysis skills are strong. There are three potential outcomes – one win-one loss, dual win, or dual loss. Two of these three are going to provide you with profits, so keep hedging in mind the next time you’re considering utilizing One Touch binary options trades.
Who Offers this Type of Binary Trading
Pretty much all of the major brokers now offer touch/no touch binary options, although they are relative new comers into the financial world. This new development is a good thing, though. You might not want to use this type of trading for every trade, but having the choice to use them is just a further tool in your trading work box that would not have been there before. If your broker does not currently have this type of option, you may want to consider finding a broker that does. These brokers are generally bigger and more reputable than the brokers that do not offer them. We have compiled a list of the best binary options brokers with low minimum deposit
There are a select few brokers that have what are officially called high yield binary options. These range in return percentages from 200 percent all the way up to 500 percent. However, as you might have guessed, these are not nearly as easy to be right with as traditional style binary options. For one, you are severely limited in your choices. Touch/no touch options are used here, but you are generally restricted to the touch option. For example, consider Apple’s stock. If the underlying asset is currently at $150.00, the touch price might be at $152.50 if you decide to go with a high yield exotic option. This would be pretty tough to accomplish in just 10 or 15 minutes, which is why the rate of return will be so much higher on these. There will not be a no touch option here since this would be extremely disjointed. Instead, to make these a more accurate binary option, many brokers will offer a lower touch price, too. In this instance, that price might be at $147.50. This way, the client is still given two choices so that they can still customize their trading.
Boundary options, which are closely related, are not as widely offered. These options are only offered by a few different brokers, but can be used to further customize your trading if you see fit. You should be vary trading before you understand the concept of itm and otm meaning, which is essential basic knowledge for understanding binary options basics.
Drawbacks to One Touch Options
Like any other type of trading strategy, the one touch has its share of negative features. For one, not all binary brokers offer this type of trade. Those that do, usually defer to the high yield variety, simply because they make more money off of this trade. That’s fine, but it won’t work with this particular method.
The biggest here is that you won’t always find good trades, so you will need patience. You might find that a week goes by and you haven’t executed a single trade. That’s okay with this method, but it certainly won’t help you to make money. This method of trading is best used in conjunction with other strategies for this reason. It can be frustrating having only a handful of trades per week, especially if they are not all winners. Supplement this with other methods whenever possible.
Drawbacks to No Touch Options
One of the first things that you are likely to notice is that the Touch options tend to pay out far more than the No Touch options. That’s typically because the Touch choice is a high yield trade, whereas the No Touch is not. In other words, the touch prices are more difficult to reach, and the brokers take this fact and make them more attractive by jacking up the reward for a correct trade here.
This doesn’t mean that Touch trades are better. Just as the lottery has a large payout but you have an almost 0 percent chance of winning it, high yield trades promise great rewards when you are correct, but your odds of being correct are very small.
One other major drawback to this strategy is that not all brokers offer the touch/no touch variant option. If you already have a broker, check to see if they have this type of exotic option available. If you are looking for a new broker, this is one of the things to consider before you finalize your choice.
Conclusion about Touch and No Touch Options
For many traders, using touch/no touch options provides another level of customization that can help them to trader more effectively. However you look at it, the touch or no touch options are just a further tool that you can use to help advance your trading.
Their importance lies in the fact that they offer you one more degree of control over an aspect of your trading that you didn’t have control of beforehand. This makes your job a tiny bit easier. When you look for brokers to trade Touch Options do not signup on any platforms named on our binary options blacklist.