One Touch Binary Options
Are you looking to spice up your binary options trading? You know, some binary option brokers offer one ‘ Touch Options ’. These are great products for those traders who have a strong knowledge of technical analysis, support and resistance levels.
So, let’s get specific.
When you trade a one touch binary option, you’re making a bet that the underlying asset will exceed or reach a specific price level during the expiration period. With that said, you are making a bet on direction… in addition to the magnitude of the move. Of course, this is a lot more difficult to do. On the other hand, these type of trades offer higher payouts.
In this example, The EUR/USD is trading at 1.37072, if the trader makes a $55 bet, they will return $170.50 if the EUR/USD ‘ touches up ’ to 1.37108 at least once before the expiration period .
In this example, the EUR/USD is trading at 1.37096, if the EUR/USD ‘touches up’ and hits the target of 1.37311 at least once before the expiration, the trader will return $172.00 on a $100 bet.
The ‘touch down’ is a bearish bet that works the same way.
New traders might be lured in… for the high payouts. However, you really need to understand technical analysis before trading this product. Sorry. But that’s the way it is.
What Should You Focus On? Namely; (1) Support and (2) Resistance.
Support – defined as the price level buyers tend to step in from having prices drop further. In many cases, traders establish several different support zones.
Resistance – defined as the price level sellers tend to step in in from having prices increase further. In many cases, traders establish several different resistance zones.
When the underlying trades between key support and resistance levels, it’s said to be in a trading range . Ideally, you want to avoid this strategy if the underlying is in a trading range.
Also, if the underlying price breaks below the support level, that support level can now become resistance…and vice versa.
Remember, technical analysis is an art . not an exact science. Luckily for new traders, there are several websites that offer support and resistance levels for free. Contact us if you’re having trouble finding any!
In addition, traders will use pivot points to find support and resistance levels. Pivot points are the arithmetic average of the high, low and closing prices of the underlying in the prior trading period. Again, there are websites out there that give you these levels for free. It might make sense for the trader to initiate a touch trade if they believe the underlying is about to break a key support or resistance level.
In conclusion, touch trading is a viable strategy for those familiar with technical analysis. However, for those new to binary options trading, they should probably pass on them. It’s important to recognize which levels the touch up and touch down levels are…and how they relate to support and resistance levels.