Unveiling the Concept of Touch Options

Binary options trading can be termed as a versatile form of trading because the trader can easily follow so many different styles. When you are into binary trading, then you can opt for the touch options also. Now, what you need to understand is that there are only two possible outcomes in case of touch options. The outcome can be No Touch or Touch.

The Two Outcomes of Touch Options

Touch

In case of touch, the broker defines the price of the asset. If you feel that the price of the asset will be able to touch the defined price level, then you can invest money in this trade. This pre-defined price is usually higher than the existing price level, but at times it can be low also.

You cannot change the price level that is defined by the broker, so you have to keep this in mind when trading the touch options. What makes the touch options so exciting is that you can earn a massive payout when trading the touch options if the price of your chosen asset touches the pre-defined price.

The Touch options remain valid the whole week. This means that if you predicted that the price of an asset would be able to touch the pre-defined price, then you will acquire a win even if the price touches the defined price level once a week.

The traders usually opt for currencies and commodities when trading touch options. When you decide to trade touch options, then you should have realistic expectations in mind. What you need to remember is that in most of the cases the asset price will not be able to reach the defined level.

This is why the payout is high. Ideally, you should go for calculated risks when choosing the touch option.

Let us understand the touch option with the help of an example. Let us suppose that you decide to trade silver asset. You invest about $100 in the trade, and it promises a profit of about 70% if the strike price is reached.

You execute the trade at a price of about $1605, and the strike price is about $1620. In some cases, the brokers do allow you to define the strike price. If you hit the $1620 strike price level, then you will be able to get $170.

No Touch

In case of No Touch, you have to select a price level that is below or above the defined price. You will need to select the expiry time as well in no touch. You will get the payout if the price level does not reach the defined price before the expiry.

The payout will depend upon an important factor in this situation, and that is how far your price level is from the standard pre-defined price.

Double Touch

The double touch is quite similar to the touch option. The only difference is that there are two target prices in double touch. The double one-touch option is a great selection when you feel that you will not be able to predict the price of an asset accurately.

The price level should be able to reach or exceed one of the target prices before the expiry to earn a significant profit. If you are not able to reach either of the target prices, then you end up losing your investment amount.

Double No Touch

The Double No Touch is opposite to that of double touch. The requirement to win this trade is that the price level should not touch either of the target prices. If this requirement is met, then the trader earns a profit.

Now, that you are aware of how touch options work, do study the market trend and invest accordingly.