One of the exotic variations of the binary option is the touch/no touch option, sometimes referred to as the “one touch” option. Here, you are predicting whether or not the price of an asset will meet or surpass a given price. With this type of option, it doesn’t matter where it finishes up when the expiry is reached, but whether or not that given price was ever achieved. It can happen early in the life of the trade, or at the very end. The No Touch Options strategy uses this variant of a trade, placing the emphasis on the no touch outcome. Before you start using this strategy, make sure that you have read our material over and you have practiced it a few times.
Applying the No Touch
The key to success with the no touch options strategy is to find an asset that is moving sideways. The range that the asset is trading within should be a pretty tight one, although that isn’t absolutely necessary if the given price is beyond the range. Next, look at the touch/no touch price that your broker supplies you with. You may find that your broker supplies you with a number of different prices. Ideally, you want a price that is above the current price, and not below. If the price is outside of the range, then you will begin to consider executing the trade.
There are a number of things to look for before you actually execute the trade. First, know that the further outside of the range that the price sits, the better. If you are trading the USD/JPY, and the range you have identified is between 101.100 and 101.250, then a no touch price of 101.251 is not going to be as beneficial to you as a price of 101.300. When in doubt, further away is always better.
The last big consideration is the expiry. In the case of this type of trade, closer is better. The sooner the expiry, the less of a chance that unexpected moves will turn the trade against you and break the range. Also, when dealing with expiries, make sure that the expiry is in keeping with the range. If you have a range that has been established for 10 minutes, an expiry of 30 minutes is not going to help you as much as an expiry of 15 minutes. Be mindful of this so that you can schedule to end your trades before surprises pop up.
Drawbacks to No Touch
One of the first things that you are likely to notice is that the Touch options tend to pay out far more than the No Touch options. That’s typically because the Touch choice is a high yield trade, whereas the No Touch is not. In other words, the touch prices are more difficult to reach, and the brokers take this fact and make them more attractive by jacking up the reward for a correct trade here. This doesn’t mean that Touch trades are better. Just as the lottery has a large payout but you have an almost 0 percent chance of winning it, high yield trades promise great rewards when you are correct, but your odds of being correct are very small. It can be discouraging to see such a high rate of return and never chase after it, but that’s precisely why the No Touch is so powerful. Still, the slow and steady returns you will see can be frustrating. If you are aware of this, then pursuing this strategy can be easier mentally.
One other major drawback to this strategy is that not all brokers offer the touch/no touch variant option. If you already have a broker, check to see if they have this type of exotic option available. If you are looking for a new broker, this is one of the things to consider before you finalize your choice.
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