Binary Options - Touch and No Touch

Touch and No Touch Binary Options

When you start trading binary options, you'll be greeted with various types of trading methods. The most common type of tool that you can use is the high/low trades, or trading simply by predicting whether the asset price will rise or fall in value. Beginning traders learn how to trade binary options with high/low trades due to their inherent simplicity. After gaining some experience, many decide to venture towards other instruments that are more advanced. An example of this is known as the Touch and No Touch options. The purpose of this article is to take a closer look at what these options are, how they are traded and the risks they pose to traders alike.

Definition of Touch and No Touch Options

As noted previously, these options are more complex when compared to other conventional binary options instruments. As their name implies, one touch and no touch options work by predicting whether or not the price of an underlying asset will either touch or not touch a specified level prior to expiration. The level that is determined can function as the price where the trade starts anywhere above/below it - it all depends on which type you are referring to. To explain further, let's take a closer look at the key elements that comprise these two options.

  • "Touch" Options: In this type of option, the price of the underlying asset has to touch a specified level once before the expiration time. Once the price of the underlying asset has touched this level, your trade is automatically guaranteed to win. At this point, the trade closes and you're awarded your investment plus your percentage of return.

  • "No Touch" Options: In order for the trade to make it in the money, the asset price must reach the expiration time without touching the upper and lower price levels marked prior to the trade. If the trade expires without touching any of the two price levels, then you are in the money. Otherwise, if the price touches the levels at any point, then it'll expire out of the money and you lose your whole investment.

Now let's take a look at what risks these types of trades pose to you as a binary options trader.

Risks

The main risk that is posed to you as a trader is the accuracy of your trades. Looking for a market trend that will allow the asset price to behave in the Touch or No Touch option is more difficult than it looks. In order to be more precise, it is best to have a strong understanding of price actions and support and resistance levels. These are very important and will be very helpful to you when trading these two options.

Bottom Line

The touch and no touch binary options are one of the most advanced trading tools that are available for use in any platform. You're guaranteed a win if you choose to trade on the "touch" option and the asset price touches the level once during the duration of the trade. As for the no touch options, if the trade expires without touching any of the levels, then you're good to go. It's still a risky method of investing that requires high accuracy in your analysis methods. Nonetheless, it is an excellent tool to use in your binary option trading.

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