If you have traded in commodities and stocks, then binary options will be a piece of cake to you. It is similar to commodity and stock trading where you buy assets and sell them with the sole intention of earning profits. But there is one big difference.
Binary Options is much simpler than the other two forms of trading. There are only two outcomes – you have to choose either up or down, i.e., the value of the assets in which you are trading. Given below is a comparison of various types of binary options that are available to a trader in the market.
1. All Or Nothing Option or Digital Option – As you read above, there are only two outcomes when you trade in binary options – up or down. This first option will help you understand and predict the movement of the asset’s direction. You will be given a fixed strike price and as a trader, you will have to figure out the movement of the strike price – i.e. if the trading price at the given date will go high or low. If you are able to figure out the outcome correctly, then you will receive a predetermined payout and if you are wrong, then you lose part of or the entire invested amount.
2. One Touch/No Touch Option – This option allows you to set the barrier position, the expiry time and the payout that you will receive. As explained above, you can have only two options –either the price barrier is breached or it is not.
The payment in this kind of option depends upon the direction in which the price of the assets moves during their lifespan. So, the one touch or no touch option includes a price barrier. If the trade price just touches the price barrier at any given time during the lifespan of the option, then payment is made. In contrast, payouts occur when the trade price does not touch the price barrier.
So, this is a very beneficial option for traders who are of the belief that an asset’s price will exceed the barrier but are unsure of the sustainability of the higher price.
3. Double-One-Touch/Double-No-Touch Option – The double one touch and double no touch option are similar to the one touch option involving a price barrier. The difference in these two options is that instead of one price barrier as in one touch option, the double touch option has two price barriers. So here, two price barriers have to be or not to be touched. In case you are unable to touch both levels before the expiry time of the option, there is still the option of payment.
This option is exactly similar to one-touch option with the difference that it is slightly more expensive than the one touch on account of having two price barriers.
4. Boundary Option – This option makes an attempt to anticipate the final price of the asset by determining if it will fall within a certain price range or not. If you choose ‘in’ and the price chosen is within the given range, then you get the payment. If, however, it falls outside the range, then you lose the money.
Binary options is one of the most profitable forms of trading but knowledge of its various aspects is necessary to succeed. The one touch and double one touch options have proved that they are very useful to traders. Many traders use these options when they are sure of the price reaching a certain amount but are unsure of the amount. So, if you wish to trade in binary options, alone or with the help of a broker, you must have information so that you can earn maximum profit.
B. Lyttle is a finance expert and a successful and experienced trader. To know more about binary options comparison, you can visit http://www.binary-options-brokers.com.