What is a One Touch Option?

With the explosive growth that we have seen in the binary options market over the course of the last several years, it is no surprise that binary brokers are continuously offering new and better options for their customers.

Several new types of binary options have been launched as part of this process. Whereas the classic High/Low option used to be the only one available, there are now many to choose from. A very popular such alternative is the One Touch option. This is the option that offers the highest potential payout of them all.

Read more about one touch options under the table…

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One Touch Option trading explained

What has made one touch option trading so very popular, so very quickly, is that it offers the chance to make a lot of money very quickly. Whereas your standard High/Low option will usually offer a payout in the region of 65%-85%, a one touch option can yield a payout of up to 700%.

The reason for this fantastically high rate is that a One Touch Option demands you as a trader to make a more complex prediction than the one you need to make in order to win a High/Low option. Whereas such options simply ask you to predict whether the price of an asset will move up or down, a One Touch Option asks you to decide if the price will reach a certain target. The binary broker will set a target price for the asset. It is then up to you, the trader, to predict whether this price will be reached within the relevant expiry time. The target price can be either above or below the current price level.

In most cases the binary broker will set a fixed expiry time for one touch options. This will often be of one week. This means that if the asset reaches the target price just once, at any time during the week, you win your option. Please note that in most cases you cannot predict that the asset will not reach its target price.

It is common practice for brokers only to allow multiples of $25 when trading one touch options. This means you can invest $25, $50, $75, etc., but no sums in between.

When should I trade one touch options?

The reason the brokers offer such high payouts for one touch options, is that your chances of winning are relatively modest compared to other types of binary options. The target prices are always set quite far from the current price, which means that a significant development will be needed in order for it to be reached. For this reason, you will only win a small percentage of one touch options.

In order to improve your chances, you need to look for strong market sentiments that indicate that the market will move greatly during the one week your one touch option will be valid for. If you find a very strong momentum in the direction of the target price, a one touch option might be a good chance to cash in on this observation. During regular market conditions, however, when no indications of a very strong movement with a lot of momentum exist, one touch options will not be advisable.

In order to make money on one touch options you need to be patient, and wait for the right market conditions to appear. If you don’t, you are very unlikely to win your trade.

Summary

You can win the highest payouts available in the world of binary options by trading one touch options. At the same time, you are unlikely to win many such trades. Be choosy, and only trade one touch options when you are sure the market conditions are right.

 

What is a One Touch Option?
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