A Simple Guide to One Touch Options
When trading options there are a number of routes to take. One choice you’ll have to make is the type of option you want to trade. For the beginner the different options can sometimes be confusing, and it’s always a good idea to arm yourself with as much information as possible. For this reason we’ve dedicated a few pages on our site to the various types of options generally available. And here we’ll be looking at one touch options, how they work, and whether it is a type you should be considering. The most popular and simplest options are call and put trades, which are a prediction as to whether the price of an underlying asset will go up or down. This is a great type of option for beginners as they are simple to understand. Once you’ve got a little practise in the basics, you might be tempted to move onto one touch binary trading. So let’s see what it’s all about.
What is a one touch option?
A one touch option is the sort of option that promises a payout once the price of an underlying asset reaches or passes a predetermined level. An investor is able to set the position of the barrier when it expires, and how much the payout will be should, the barrier be broken. There are only two possible outcomes, as you’ve come to expect with a binary options trade. If the barrier is broken a trader will receive the agreed full payout. If the barrier isn’t broken the trader will lose the premium paid to the broker.
This type of option is popular with traders who believe the price of an underlying asset will pass a certain level in the future. And for those who aren’t sure whether the higher price level is a sustainable one. One-touch options are usually less expensive than a double one-touch option, and are becoming very popular for commodity and Forex traders. We should mention that one touch options can only be traded at the weekends when globl markets are closed. And one major reason for the popularity of one touch options is they can offer return rates of 200-600%.
We briefly touched on a double one-touch option and you might be wondering what this is. So let’s first explain before going any further.
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What is a double one touch option?
A double one-touch option is the type that gives a trader an agreed upon payout price if the underlying asset reaches or breaks one of two predetermined levels. The trader is able to determine the level of both barriers, the expiry date of the contract, as well as the payout should the price rise above one of the predetermined levels. Either of the price barriers must be broken, before the option expires, or there will be no payout for the investor. If neither of the price levels is broken the option is considered worthless, and the trader loses their premium.
A double one-touch option is great when you believe the price of an asset will change dramatically in the future, but aren’t sure the direction it will take. A trader stands to benefit, whether the price goes up or down, so it is a kind of straddle position.
5 steps to start your one touch options trading
- Find the best one touch options broker – You’ll need to do some research, but we’ll be helping with lots of informative an helpful reviews and binary options articles
- Open a binary options demo trading account – Start by trying out a demo account, as it will mean there is no risk of you losing the contents of your bank balance
- Make your first deposit – Once you’ve got in some practice you should be ready to trade with real money, but start small and spread the risk
- Choose an asset – Trading with a small amount of money to begin with invest in an asset you think will reach the goal rate
- Try different strategies – See what works and what doesn’t work for you, in order to find the winning formula
Tips on finding the best binary options broker
Let’s finish up by recapped some of the points we’ve touched on in one of our other pages, by looking at finding the best binary options broker, and what you should look out for.
- Read reviews – We’ll be featuring plenty here at topratedforexbrokers.com, and there are plenty of other sites online, offering similar information.
- Ask for recommendations – Word of mouth still works brilliantly, even in today’s internet savvy world.
- Test and try before you sign up for real – We have to reiterate that binary options trading can be a risky business, and taking a risk with the broker you choose is a step you can definitely avoid. If you’ve got a few names try out with a demo account first, so you can get a good feel for the broker.
- Use your favorite search engine – You may get hundreds, possibly even thousands of hits, which means you’re going to have to sift through them to find the sites with valuable information, but you’ve found your way here, so are already off to a head start.