A touch Binary Options trade or could be called as Touch/No Touch Binary Options trade is a trade based on the principle that whether or not the traded asset will touch or not touch certain price barrier before the trade expiration.
A profitable touch binary options trade is defined as when the market price of the asset that trader purchased, touches a set target price or price barrier before the expiry of the trade. Expiration of the trade could be minutes, hours or weeks.
Touch or No Touch Binary Options Example
Below is a simple example of a Touch and No Touch trade on the 24option platform; 24option is one of the binary options brokers that offer Touch/ No Touch binary options.
In the example above, we could easily spot that the financial asset that is being traded is Crude Oil. Crude Oil is being purchased at the price of 97.265 and the price barrier for that current trade is set at 97.265. Choose the expiration time and set the traded amount, then off you go. If during the expiration, price touches the target price, then the trade is profitable and you’ll set to profit 67% of your investment. For example, you invest $100 in that trade, your total payout will be $167. If your analysis is not correct and the price doesn’t touch the target price in its whole course of movement, you are set to lose your entire investment.
If you’ve noticed, you’ll see that the payout for that trade is quite low, which’s 67% compared to the regular 85% payout. The main reason is that the target price is very close to the current price; therefore the chance of winning is significantly higher than the chance of losing. It’s the main reason why the payout is quite low.
Let me give you a live real trade, in the figure below, you’ll see that we’ve done a Gold Touch trade on 19th of October. The goal for that trade is to accurately predict that during the next 7 days, gold will hit $1690 an ounce.
At the time the trade is triggered, gold is sitting comfortably at $1649 per ounce. There’s quite a long way to reach that target price therefore the payout seems to be very lucrative. With $45.59 investment, you have a chance to pocket an easy $100.
In the fourth day of the trade, we witness a significant strike in gold price and it hits our target price. That leaves the trade as a profitable trade and $100 is pocketed from that $45 investment. That sounds pretty easy if you know what you are doing!
How to Trade the “One Touch” Binary Option
There’s several steps and question you need to ask yourself before taking an one touch options trade.
1. Look at the target price, how far is it from the current market price?
2. What’s the payout estimation? Is it a decent payout?
3. What’s the expiration time you should you?
4. How much should you invest?
The very first thing you need to master is the knowledge to have an edge in this market. You need to understand technical analysis and bear in my fundamental views too because both of it are the main force that drive the market. Afterwards, identify for yourself the likely direction of the market: bullish or bearish? This will help you to significantly increase your estimation of a good target price. In the above example, the fundamental view at that time is that during the Euro zone crisis, people would look to invest in safe heaven asset like Gold. Therefore, we expect that Gold price would surge in next week. The trade turns out to be a winner because we’re spot on with our analysis.
Secondly, look out for the payout. Look for a good payout in your thinking. Ask yourself whether this is likely a good trade and whether the payouts are decent too.
Lastly, look at the expiration of the trade. If you are playing with big expiration time like days or weeks, the market will have more rooms to move and likely to trending if there’s big news waiting. Look out for the upcoming news before you place a trade too because news is unpredictable.
All it takes is one touch but make sure you do your analysis carefully and that’s where big money is.