Binary Options Trading Strategies

Binary options empower the investor with a flexible trading tool that can help him react to any change happening in the market. There are five type of binaries which fall under the following categories:

Binary No Touch (also called “Lock Out”)

a binary option that gives an investor a payout at expiry only if the spot rate has NOT traded at or beyond the touch-barrier before expiry. Only two outcomes are possible with this type of option:

1.    the barrier is breached and the investor collects the full payout agreed upon at theoutset of the contract
2.    the barrier is not breached and the investor losses most of his initial investment
If a trader predicts that an underlying asset is about to bump into a strong resistance or support level,
than the one touch option let speculate that the price won’t fall below a certain support level or alternatively, manage to break out a certain resistance level.
This options trading strategy is usually deployed according to technical analysis assumption such as: Support and Resistance level, Fibonacci analysis etc.

Binary Double No Touch (also called “Range Binary” or “Double Lock Out”)

Is a binary option that pays the investor the predetermined payout at expiry if the price of

the underlying asset does not reach or surpass one of the two predetermined barrier levels.

Only two outcomes are possible with this type of binary option:
1.    The barrier is breached and the investor collects the full payout agreed upon at the outset of the contract.
2.    The barrier is not breached and the trader losing most of his initial investment.

This strategy is aimed to speculate whether an underlying asset predicted to move within a predetermined price range.
In comparison to Strangle options strategy, double no touch don’t exposed to theoretical, unlimited risk of a strong price action in the money.

The risk is limited and predetermined.

Example:
Let’s say the EUR/USD is traded now at the 1.4253 price level,

If you buy a daily ‘Double no touch’ option with 1.43 as the upside barrier level and 1.4205 as the downside barrier level and by the end of the day the EUR/USD moved in a narrow range of 1.4206-1.4252 then this ‘Double

no touch’ binary option will be ‘in-the-money’ paying the full predetermined payout to the trader.

Double One Touch

If a specific underlying asset is predicted to break out a specific price level, with no certainty of which di

rection it will be that the Double one touch strategy is used.

The double one touch binary option will provide the predetermined payout if an underlying asset broke out either one of the directions.
The double one touch often used to speculate a price breakout after a price consolidation or upon economic data release such as earnings reports or macro economic data.

Example:
Let’s say the EUR/USD is traded now at the 1.4253 price level, If you buy a daily ‘Double one touch’ binary option with 1.43 as the upside barrier level and 1.4205 as the downside barrier leveland by the end of the day the EUR/USD surpassed the 1.43 level, or alternatively breached the 1.4205 level than this binary option will be ‘in-the-money’ paying the full predetermined payout to the trader.The following illustration shows a double one touch binary that surpassed the high barrier with an uptrend breakout.

One-Touch Options (also called “Lock In” or “Touch Digital”)

The one-touch binary option gives an investor a predetermined payout once the price of the underlying as

set reaches or surpasses a predetermined price level.
There are two possible outcomes for the ‘one-touch’ binary option:

1) The predetermined price level is breached, the investor receive the payout agreed.
2) The price level is not breached and the investor losses some of his investment

When an underlying asset is expected to move sharply to a specific direction based on solid assumption than the ‘one touch’ binary option shall be used. When buying a one touch binary option, the trader anticipates either a breakout with taking under consideration the breakout strength,as the one touch options trading strategy will be in the money only if it ‘touched’ the predetermined price level.

Binary options (also called “Digital Options’)

Binary options are one of the simplest and inexpensive investment products out there.
If you believe that the EUR/USD will climb above the current price (1.4253 for example), at the end of the selected duration (within 1 day for example) that a binary option is a great choice for you, offering a predetermined reward and risk.