Digital options or binary options are fast becoming the preferred way to trade among those interested in speculating or hedging. Classified as exotic options, they basically involve trading price fluctuations in various global markets. Trading in binary options works differently from trading in traditional options, although they do concern the same markets. Everything in binary options, from the payout, fees, and risks, to the liquidity structure and investment process is definitely distinct.
Binary options may be alternative, but trading in them is much simpler. With access to the different global markets such as stocks, commodities and currencies, traders wager on the direction the market will take. If they make the right predictions, they are paid a fixed return no matter how much the instrument moved. Losses from incorrect predictions, in turn, also involve a fixed amount.
For those actively trading in binary options, One Touch is the way to maximize earning potential with the possibility of gaining up to 500% of your money; however, the concept is a little more challenging than your typical binary option. One Touch binary options are exotic options that allow payouts to traders once the price of the instrument reaches or goes past a predetermined limit. Basically, investors are allowed to set the following factors: the position of the barrier, the expiration time, and the payout amount once the barrier is breached.
The One Touch option only has two outcomes: that the barrier is broken and the investor gets the payout set at the beginning of the contract, or the barrier is not reached and the investor loses the entire premium given to the broker. This binary trading option is useful for traders who have a knack for correctly predicting the level that the price of an underlying asset will reach but can’t be sure if that level can be sustained. With only one barrier level, One Touch options are a bit cheaper than the typical option, which makes them popular among commodity and forex traders.
One Touch traders do not have to wait for the actual expiry time. Once the barrier is broken and the target price reached or surpassed, they’re automatically eligible for payout, hence the term “One Touch.” For instance, when the EUR/USD closes on Friday, there are two options for traders: “call,” meaning the asset will go up to a predetermined higher amount at least once before expiry time, and “put,” meaning it will fall to a predetermined lower amount at least once before expiry time.
One Touch option trading is a further simplified yet challenging way to play the binary options market. When predictions are right, payouts can be huge.