What is one touch trading in binary options

By Published On: 05/15/2011 Read More »

One touch trading (also called “Lock In” or “Touch Digital”) is an option that gives a binary options investor a payout once the price of the underlying asset reaches or surpasses a predetermined barrier. One Touch trading options are an exciting new way to trade binary options. Because One Touch trading options offer returns of up to 500% on your trades, One Touch trading options are one of the richest trading opportunities around in online binary options trading. In this article we would like to take a detailed look at the pricing of one touch trading options, which are often also called binary or digital options, hit options or rebate options.

Understanding one touch trading options

One Touch trading option is a type of exotic option that gives an investor a payout once the price of the underlying asset reaches or surpasses a predetermined barrier. This type of option allows the investor to set the position of the barrier, the time to expiration and the payout to be received once the barrier is broken.

One Touch trading options provide you with the opportunity for excellent economic trading due to the fact:

  • they provide you with amazing returns: from 250% – 550% for every option you trade
  • the trade ends each and every day/week, at 17.00 GMT or 19.30 GMT on Friday • they are sold at a predetermined price which is not what the current market price was when bought
  • if it is more than the market price it is called a “Call” option
  • if it is beneath the market price it is called a “Put” option
  • One Touch trading options have been also called “all or nothing options”. If your one touch option trade ends “in the money” you’ll receive the full amount of the payout, if it’s “out of the money” you’ll lose the total amount of the trades value.
One Touch Trading Explained

One Touch Trading Explained

How does one touch trading work?

Only two outcomes are possible with the one touch type of option:

  • the barrier is breached and the trader collects the full payout agreed upon at the outset of the contract, or
  • the barrier is not breached and the trader loses the full premium paid to the broker.

If you choose a barrier above the current price of the asset, you will be profitable with a One Touch trading Option if the currency asset rises up to, and touches, the barrier before the option expires. If you choose a barrier below the current price, you will be profitable with a One Touch Option only if the asset falls down to, and touches, the barrier before the option expires.

For example, if the NASDAQ closes on Friday at 1,800, the binary options broker will offer two separate one touch options: one for the NASDAQ to touch 1,830 at least once in the following week, and one for the NASDAQ to touch 1,770 during the following week. For both touch options the returns will be very high, depending on several parameters.

The advantage of one touch trading options is that they do not have to be cashed in at the expiry time, but rather at any point in time during their life. They can also be used as hedging tool for stock option strategies or forex spot positions.

Applying One Touch Trading in binary options

Speculative traders use One Touch Trading Options as bets on a rising or declining exchange rate. Some traders prefer to hedge and trade One Touch Trading Options like a rebate in order to secure compensation in the case their trade is unsuccessful. One-touch options are often integrated into structured products to increase the returns on forward and interest rates.

The undiscounted value of the One Touch Option is the probability under the risk-neutral measure. The market standard is to quote the price of a One Touch Trading Option in per cent of the payoff, which is a number between 0% and 100%. The price of a One Touch Option will depends on the over-hedge and the bid-ask spread. The spread in turn depends on the currency pair and the client.

Where can you trade One Touch Options

Refer to the table below to compare our recommended binary options brokers who offer one touch trading and also the payouts they offer.

 AssetsPayoutsMin. DepositBonusWeekend Trading 
GBP/USD, USD/JPY, Oil, DAX, FTSE, Nasdaq, Dow Jones, GBP/JPYUp to 350%$20024% Bonus
USD/JPY, EUR/JPY, EUR/USD, GBP/USD, EUR/GBP350%$200Up to 30% Bonus
GBP/USD, USD/JPY, Oil, DAX, FTSE, Nasdaq, Dow Jones, GBP/JPYUp to 350%$200Up to 30% Bonus
Gold, Oil, Nasdaq, Google, S&P500, Apple350% - 400%$100Up to 25% Bonus

One Touch Trading Options offers investors a great choice to make huge profits in a very short amount of time. However due diligence must be considered before you start trading one touch options as they are highly risky. It is recommended that only investors who have an in-depth knowledge of the asset they are trading should make use of the one touch trading option.

About the Author:

ForexPromos Editorial Team is comprised of a selection of hand picked editors that bring you the latest breaking news from the financial markets. We also provide forex educative articles as well as comprehensive fx broker reviews.

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