One touch options are some of the most popular vehicles for binary trading. This option derives its popularity from the amazing profits a successful trade can bring. Depending on the broker, a trade “in the money” can bring a return of up to 600%.
The concept behind one touch options builds upon the already simple yes/no proposition of ordinary binary options. As the trader, you interpret the market to determine in which direction the price of an underlying asset will trend. What one type option allows you to do is make a trade on whether or not the underlying asset will reach a specific price. The reason why its call one touch is because it’s enough that the asset touches your estimated price once for you to gain an incredible return on your initial trade. The only caveat is that the asset price needs to touch the target price before the option expires.
How does one touch binary options work?
Below is a quick 4 step one touch options example of how you can increase your returns.
- Let’s say you’ve been following EURUSD, and the current price for the currency pair is set at 1.1300.
- With your broker of choice, you chose to trade one touch options and the timeframe. For the sake of this example, let’s say you choose a one hour timeframe.
- At this point the broker usually provides two options to trade – a higher price and a lower price. In this example, the broker provides a higher price of 1.1380 and a lower price of 1.1220. All you need is predict the assets direction.
- If, based on your analysis, you think the asset will go long and reach 1.1380, you put your money down.
One of the great benefits of one touch options is that it doesn’t matter when the asset will reach the target price just as long as it happens within the timeframe you choose.
When to use one touch binary options?
The best time to use one touch binary options is when the market is volatile, which the markets usually are during the opening hours of the US and European markets. In the first two hours of each opening there is a great volume of trades being made. Currencies are directly affected by this dynamic exchange on the stock market. For every market state (i.e. level of volatility) there is the right strategy and trading method. A successful trader will know how to recognize when the market is calm and when the calm belies market preparation for a move on the horizon. For instance, in a low volatility market it is best to trade with boundary options, when a winning position will be between predefined price range. For a volatile market, one touch binary options are the perfect choice.
Another great time to take advantage of one touch options is when major world events occur. These events are generally scheduled, and their importance is most often well known. Just before the event is announced or the results tallied, you may place your option – all you need to do is predict the direction. You can even win purely as a result of an anxious market anticipating volatility. Here is a recommended site that lists all the upcoming events – just be sure to adjust for your time zone.
One Touch Trading Strategies
Below are 3 examples of one touch trading strategies. It’s best that you choose one strategy that you feel most comfortable with.
- One Touch Event
One of the best strategies to use with touch options is to trade just before an important and high impact event. In most cases, the market will have a sharp and volatile move at the event time. Even if the result of announcement is pretty much as expected, the volatility and anxiety of the market will move the asset’s price and increase your chances of winning.
When you using the one touch event strategy, I would recommend using a 1 hour time frame when the event occurs within the chosen hour.
One example of a high impact event is the ‘ADP Non-Farm Employment Change’ or rate changes that affect the US and EU markets.
- One Touch Two Ways
This strategy should be reserved for experienced traders who are versed in managing their binary options account. The only indicator you need is bollinger bands with the following parameters:
Period – 20; Deviation – 2
The set-up for this strategy is a narrowing down of bands, shrinking the price range. The recommended trading hours are during the European and US markets.
Take action once you notice a breakout from the narrowing bands.
Direction of the Trade:
Before you employ this strategy, you need to make sure for each direction, you can at least double your initial investment. Now comes the tricky part – you place an option in both directions, Put and Call. The asset has broken out of the bands and it should make a sharp and volatile move.
Before you take any action you should confirm the winning rate are above 200% for each option (the winning rates will change with different brokers.) The strategy is risky because in some cases you might lose both trades, but it’s enough that you win one trade and lose the other so in total your trade expires “in the money”.
- Big Ben Strategy
I already wrote about this great strategy which I use occasionally. Is is a great fit for use with one touch binary options.
The rules are simple: basically this strategy is designed for GBPUSD only. The pound dollar pair, is in fact one of the most volatile and technical currencies.
Trading Time Frame:
It depends on the one touch offer, I prefer and recommend to trade on 1 hour time frames for the one touch, but you can also be successful on 15 min timeframe.
7:00am – 9:00am (GMT)
When looking on the chart, make a trend line and prepare for a breaking point. Once it’s there just place your one touch option within the right direction.
Remember: If there are no clear setups do not trade. Wait for next morning, there will be always new opportunities.