Touch/No Touch Option

Intrducing the One Touch Option

The One Touch option is a type of binary options contract that is available on some selected platforms in the binary options market. Usually traders will only get to see this trade type on the trading platforms of brokers who are white-label partners of Tech Financial Ltd or SpotOption Ltd.

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The One Touch option is a high yield option in which the broker sets payouts to as high as 250% to 500%. In return, the trader is expected to predict if the asset in question will touch a particular strike price located at some distance away from market price, in the one week that the trade will be active.

The trade expiry is one week, starting at anytime from Friday/Saturday the previous week and terminating at the close of the trading day on Friday a week later. Therefore, the trader can only enter a position from Friday evening till Sunday morning. The exact open time for the trade depends on the broker used for the trade execution. The hallmark of this trade is that the strike price is located far away from market price, and the ambitious nature of this strike price is what drives the high payouts promised for this trade.

So what chances does a trader have in succeeding with this type of trade? Success with the One Touch will require that the trader select the right kind of asset and the right opportunity at the right time.

Selecting the Right Asset

Assets which are naturally trending, and whose price movements have high volatility are the assets of choice for this trade type. Assets that are more inherently range-bound assets or assets that have a tendency to trade in a very tight range do not perform well with this trade type. Certain commodities such as gold, as well as certain stocks and currencies will tend to do better with this trade type than other.

Selecting the Right Opportunity

An asset that is on the verge of a major breakout is an asset that is presenting the right opportunity. Breakouts are created by major news events. In the stock market, a trader will typically be looking at the corporate earnings season, singling out assets for which the market has major expectations.

For the forex market, the trader will be looking for high impact news events that are likely to lead to big moves of up to 300 pips or more. Recently, we have seen gold and the Australian Dollar sell off massively in the markets. The moves seen are indicative of what a trader looking to profit big time from the One Touch trade should be watching out for. These are the times when an asset is said to present a wonderful opportunity to profit.

Timing           

Trades are typically set during the weekend. The weekend will therefore be a good time to set up trades on assets that present the right opportunity on the Monday or Tuesday following the trade setup. Therefore, the trader will have to look at the time tables or calendars for events such as release of news or release of corporate earnings.Assets that are considered the right candidates and whose news will be released on a Monday or Tuesday following the weekend the trade is setup are then selected. If an asset whose news will be released on a Thursday is used, either the trade will be too late to catch its move (if setup on the Saturday following the Thursday), or the trade will not have enough time to experience the kind of move it needs to end up in the money (if setup on the Saturday preceding the Thursday in question). So timing is key. We need the news to work in our favour and to have enough time to do this quite early.

Trade Requirements for the One Touch Trade

The trader must select from the assets that the broker has presented for the One Touch trade. Usually two trades for one asset are presented, with the strike price located above market price for one trade, and located below the strike price for the other trade.  The trader therefore has to pick the right direction for the trade in order to succeed. Certain clues as to what direction a trade may possibly take are to look for continuation patterns on the charts, and to study historical news reports to see whether a trend has developed which could be used as a predictor of what the price movement is likely to be.

Once the trader has these pieces of information, the trade can then be taken when it opens and then the big payday can be expected.

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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