Oct 30, 2013

Various Contract Modes present in Binary Options Trading

Binary options or fixed return options are a type of trading that give a set amount of money to the trader. The trader has to just predict the movement of a specific asset or tool, and calculate on whether the price will go up or come down. He does that after making a thorough research about all the factors which influence the price. Binary options form a simple and easy trading method. In this method, the trader is aware before making the trading about the loss or gain that would result which considerably reduces the risk factor.

Unique Feature in Binary Options

The most favorable factor that makes binary options trading a popularly sought out mode of trading is the advantage of trading with different contract types. In the traditionally based binary option assets that are related to stocks, commodities, and forex, there are only two variants namely long and short type. But in case of binary options, there are different types related to the trading contracts and each of them depends on the platform that is employed for the trading.

Touch Option Types

Touch Option

In this type, the trader selects a strike price and decides on the possibility of the asset price touching the strike price in the time duration that is assigned to the trade. This can yield good profits to traders if they have a sound knowledge on the trading pattern. The trigger is the name given to the rate of trading the currency. If the currency touches the trigger rate, the trader will get the payout money. The trader knows in advance about the amount he would receive or lose.

No Touch Option

Here the trader can access the profit only in case of the currency rate reaching the trigger in the specified time frame present in the contract. If the trigger is high, there would be less chance of the currency nearing the trigger rate and the trader would get less gain or suffer a loss.

Double Touch Option

This method also has a touch and no touch option. In the touch option, the trader is allowed to determine two triggers and in the event of either of the trigger being reached first, the trader gets a profit. This can be profitable only when the trader believes that the market will show an upswing, but is not certain about the direction in which the market will move.

In the no touch type, the trader predicts about the inability of the currency not reaching the two triggers that are set. This is done only when the market shows signs of upward trend. A consolidated change in the market is favorable for this trading type.

Short Span Option

There are two types in this category, namely the 60 seconds trading option and the run bet. The former as the name specifies has an expiry of 60 seconds and is tricky due to the very short time span involved. The run bet is a still shorter option type that expires in a few seconds’ time. Luck plays a large part in these types.

There are several other types present like boundary trading, high profit option, and classical types which can be used for getting high profits. Mostly, traders combine the different types for making more profits and reducing the risk.

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