Forex trading strategy “Three touches. Types of binary options
Up / Down Options
The most common type of binary option. If you think that the price will be higher than the strike price, you buy a call option, if you think that it will be lower - a put option. The winning condition is the price at the time of the option expiration is at least one point higher than the strike price. If at the moment of expiration the price remains at the same level or at least one point below the strike price, the option has lost.
The terms for this type of options are different hours, days, weeks, etc. But there are also mega short-term options, the so-called turbo options. The expiration date for them can come in minutes.
The problem with this type of binary options is that they have a low return in relation to risk. On average, about 80% of the premium is paid for such options, and if in Forex the optimal profit / loss ratio is 3 to 1, then approx. 0.8 to 1. Therefore, the quality of up / down options trades should be very high.
One Touch Options
When trading this type of option, it is necessary to determine whether the price will touch the strike price at least once within a certain period of time. The strike price level can be selected independently, or the broker can set this level.
You can sometimes buy One Touch options even on weekends, for example, until the end of next week. There are different conditions.
There are also notouch options. The price must not touch the strike price. Also there are double touch / double non-touch options. The price must touch / not touch two different levels.
Payouts for touch / no touch options are among the highest and average from 150% to 350% of the option value. In cases with a double touch, it can reach up to 750%, depending on the broker.
Range options
The broker sets the upper and lower boundaries for the price (two levels of the strike price). Depending on the conditions of the option, it is necessary to determine during the period of the option whether the price will remain within these boundaries (trading in the range), or will go beyond the boundaries, breaking through the established levels (trading outside the range).
The maturity of the corridor options may vary.
Payouts here are usually the highest - up to 750%
Most traders who trade option contracts with a fixed execution date prefer the simplest binary options - raise (Call) or decrease (Put). However, on short time frames, the probability that the price will rise or fall is almost the same. Therefore, it is very difficult to build a short-term strategy on the rates "Higher / Lower" or "Increase / Fall".
To build a short-term betting strategy, consider a very interesting, but not very popular "No Touch" bet. In this bet, you win if the market does not touch a given price barrier, at any time during the bid.
Binary option no touch
Our short-term strategy will consist of 4 components:
- 1). Determination of the direction (position relative to the current price) of the price barrier. To do this, choose a financial instrument that has a pronounced upward or downward trend. There are many methods and indicators to determine the trend and its direction. I can suggest one of the simple but reliable methods. Using the slope with a period of 21 (SMA-21), on the daily chart of the instrument, we determine the direction of the trend. There can be three options - "Up", "Down", "Neutral".
Downward trend. Daily chart.
Then we apply the same SMA-21 indicator for the same instrument, only on the weekly chart. We also determine the direction of the trend. And there can also be three options - "Up", "Down", "Neutral".
Downward trend. Weekly schedule.
You can buy a bet only if the direction of the “Down” trend coincides both on the weekly and on the daily chart of the instrument. In this case, the "Specified Price Barrier" should be located above the current quote of the financial instrument. The second option is to buy a bet if the direction of the “Up” trend coincides on both the weekly and daily charts of the instrument. In this case, the “Specified Price Barrier” must be below the current quote of the financial instrument. In all other situations, it is worth refraining from making a deal and determining the direction of the trend for another financial instrument. - 2). Determination of the distance between the current price of the instrument and the "Specified price barrier". Finding this distance should be based on the "Risk-reward" ratio that is optimal for you. Since the shorter this distance, the more likely the price will “touch” the given barrier. However, any investment activity is determined by this law, the higher the risk, the greater the profitability. The principles of determining the distance based on historical data are presented in the article "Overview of financial betting strategies". I will give a short example from this article: “This betting strategy consists in analyzing the previous (“ historical values ”) of the selected instrument. Let's say you select an “in-range” rate for the EUR / USD pair over a period of one day. You download the history of quotes for this pair, for example, for the last year, for a period of 1 day. Then you calculate the difference between the highest and lowest price for the day. You will end up with a series of about 250 values. You are ordering this row in descending order. And you cut off the first 37-38 values, that is, 15% of the total number of values in the series. Then you take the 38-39 value of the series and add it to the current price of the euro / dollar pair. This will be the upper barrier of the range. Subtracting the value of the series from the current price of the EUR / USD pair 38-39, you get the lower barrier of the range. As a result, we can assume that with a probability of 85%, the price of the EUR / USD pair will not go beyond this range within 1 business day. If this condition is met, you will receive about 15-16% profit on your bet. "
- 3). Determining the size of the bet. Determination of the rate is related to the area of risk and capital management. In most of the literature on this topic, there is a figure of 5%. That is, your potential losses for each trade should not exceed 5 percent of your capital. Since the principle of working with binary options, as a rule, is "all or nothing", then you risk the size of your entire bet. Therefore, the size of your bet can be set at 5% of your deposit. Of course, your income will also significantly decrease, but in any case, you should not risk the entire deposit in one transaction at once.
- 4). Determining the time of the bet. It is also a very important component. The minimum betting time for major betting companies is usually 1 trading day. To be more precise, a little more. Since today we can purchase a rate with a maturity date - “tomorrow's close”. According to the logic of the bet itself, the shorter the time we choose, the less probability of "touching" and losing. Unfortunately, in this case the amount of income also decreases, since the “Risk-Profitability” rule applies here as well. But to reduce risks, I advise you to purchase a bet with a minimum of time. To minimize time, purchase bets just before the market closes.
Many of you are familiar with this type of option as “touch” or “one touch”. This type of option implies touching a level in a certain time period. Why is this option attractive?
Prepared by Evgeny Kachalov, trader-analyst at AcademyFX.
It is attractive with a large payout percentage. On average, about 200%. Imagine betting $ 100 and earning $ 200. Many traders use this type of option preferably for news events. But brokers are also on the alert and do not let them make money on news so easily, reducing the payout percentage just before the release of an important economic event. the likelihood of execution increases.
Today I would like to touch upon such a type of option as “no touch”. I think it is clear from the name that the point is that the price should not touch a certain level within a given time frame. For me personally, this option is preferable, tk. I have significant experience in the Forex market and know some patterns of price movement in the medium-term distance.
Another reason why I sympathize with this type of option is that very few people use this approach in their trading.
Consider an example of using this type of option
Let's say we are trading with the trend. With the help of technical indicators, we determined the direction of the trend and we expect the development of the correction. After waiting for a while, so that a correction in one form or another has probably already formed, we can open a terminal for BOs and select options for our potential deal.
It is important to choose the distance in points that, according to your assumptions, the price will not be able to pass
If we take a payment of 200%, then the following favorable options are possible for us:
1) In the case of the 1st positive outcome out of three, we will remain at zero.
2) In case of 2 positive outcomes, we already earn a lot.
I opened a couple of trades today. At the webinar, we will be able to discuss them in more detail and draw specific conclusions.
At the webinar, we will discuss:
- a little introductory theory about BO;
- start with an expiration of 45 minutes;
- Bollinger Bands strategy;
- candlestick pattern "PPR";
- no touch option.
You can independently "master" binary options, but I would like to help you and share my experience, therefore passing the special course "Binary Options" under my guidance is:
- The ability to trade both intraday and long-term.
- The degree of risk and reward is known in advance.
- The strategy methods are applicable in any market.
- Flexible money management methods.
- Trade regardless of the size of the deposit.
- No spreads or commissions, just profit.
- Many types of binary options.
- The ability to combine trading methods.
Submit your application
*on free webinar and discuss indicator-free trading with Evgeny Katchalov and other traders.
For trading binary options, many strategies with high profitability are used, and one of them, which has shown itself to be a solid five, is the One Touch strategy or, if you like: "One Touch".
One-touch options trading assumes that the asset price must reach a certain predetermined level (strike-level) once from the moment of purchasing this option until the expiration time.
The "One touch" strategy used in binary options trading. Basic principles of "One touch" trading tactics
The "One Touch" strategy is no longer a classic option, since here it matters not only whether the price of an asset will be lower or go above the current level, but also what its course will be, that is, how far it will will move from the point of its location at the moment. This is the main one according to the “One touch” system.
To enter profit by strategy: one touch, the price chart needs to reach a certain point, set at the time of purchasing the option. Then everything is simple - when the price touches this point, you make a profit, since such an option is a winning one. The amount of profit depends on the level set by the trader, that is, how far it was set from the initial price level at the time of the option purchase.
In most cases, the one-touch strategy allows you to make a profit of 100% and 500%, and sometimes even more, from one deal. In other words, if you have only $ 1oo on your trading account, you can get $ 500 or more from one deal... The expiration date of such an option does not have to be very long. Therefore, these are the most popular today.
How to achieve high profitability in the “One touch” options strategy?
The One Touch strategy is designed to generate a high percentage of profit. According to these indicators, it is several times higher than other types of options. As mentioned above, traders using this principle of the strategy to trade binary options can receive up to 500% profit and more from one transaction! However, the higher the level of profitability, the higher the riskiness of such transactions.
Therefore, if you are going to open the One touch option, you need to make sure that the exchange rate trend can really reach the level you have chosen, otherwise, the probability of the deposit being drained increases. To do this, do not forget to study, but at the same time remember that you should not blindly follow their advice, they may be wrong, and besides, there are no universal solutions for all cases. It will be correct to combine the opinions of experts with your own conclusions.
Why is the ‘One Touch’ trading strategy so profitable?
It's simple, if you see that the price of an asset can actually reach and even overcome the strike level, regardless of where it is at the moment (above / below this level), then the income from such a transaction can be increased by purchasing additionally for those the same assets are "One touch" "put" or "call" options.
Let's see how this happens with an example:
Let's assume that your One Touch strategy in case of winning should bring at least 300% of the profit. During the trading process, certain important news comes out, and you understand that the price of the asset you are trading will definitely reach the strike level, but you can also get additional profit from the price fluctuations. That is, you can additionally make a deal to increase and decrease the rate of the same traded asset.
Of course, only one of them will bring profit - the second will be unprofitable. But in the end, you will recoup a lot more, since winning trades (300% and from the "put" or "call" option) will cover all losses and increase your capital. The main thing here is to make sure that the strike level is really achievable and the market is in a state of high activity.
The one-touch strategy can be used in both short and long term. But the tension in trading is much greater than in long-term ones. If you use the one-touch strategy for long-term periods, then you should take into account that the strike levels are higher here, therefore, before opening a deal, all actions must be carefully considered. In other words, a long-term one-touch strategy trade can only bring profit after a detailed and in-depth analysis.
If you want to trade options on the “One touch” system with high profitability, then you should take into account the fact that during the day, however, as well as during the trading week, different currencies and other underlying assets are tested.
Therefore, even if you are 100% sure that, for example, the Eurocurrency will grow by 30-40 points in the near future, buy options with a validity period for which the maximum volatility will be observed. Only then, the one-touch strategy can justify your calculations. In general, if you work carefully and take reasonable risks, then the strategy: one touch will allow you to receive good stable income for a long period.
Strategy: One Touch - Advantages and Disadvantages
Strategy - One touch, although it is a high yield trade, it is still free from advantages and disadvantages. Of course, the main advantage of this strategy is the ability to really earn a lot, this is a fact. If you use all the possibilities offered by options of this type, then traders can make a lot of transactions, say, no less than when trading classic Call / Put options, and get much more profit. But let's face it, the risks here are also many times greater, therefore, experts recommend taking seriously each of the transactions - let there be fewer of them in quantity, but in terms of quality, they will be more profitable.
The next no less important advantage, which the one-touch strategy possesses, is that in order to make a profit, the price must touch the point chosen by the trader, and it is enough to do this only once. At the same time, there is absolutely no difference whether the price, upon expiration of the option, will be above this level or below, or even go down the level of its opening. Here the main touch - the price touched the specified point - will automatically make a profit.
It should be noted right away that most brokerage companies count the one-touch option as being executed immediately after the price touches the required level. That is, a trader can open a long-term option, for example, for more than a few days, and make a profit already in, say, an hour, immediately after the occurrence of an event requiring its execution, and this, as you know, is quite convenient.
Disadvantages of the strategy: One touch in binary options trading
As for the disadvantages, the one-touch strategy mainly for binary options has one significant and most important drawback, of course, the highest risks.
But they are quite acceptable, because the use of this strategy brings traders and profits much higher than when trading other types of options.
VIDEO REVIEW:
Option trading strategy based on the "One Touch" principle
One touch binary options are very popular, they are found in most brokerage companies. Either one touch or one touch can be named, which does not change their essence.
What are one touch options? On the price chart of the asset we have selected, a certain level is displayed, which can be lower or higher than the current price value. The trader's task is to determine whether the price will reach the set level or not before the option expires.
There are three main varieties of the one touch option:
- will or will not reach;
- will reach;
- whether it will reach the level at remote placement.
| Will or won't. This option, in my opinion, is the most convenient for trading and earning. We ourselves choose the moment at what price to buy a binary option. Until the time of purchase, the target level constantly changes its values following the market - it seems to be attached to the market price at a certain distance, | for example, 10 points. You can buy a binary option that the market is up to the time of execution will not touch target level, but you can buy a contract, that all the same touch will occur. This is convenient, because you can create a strategy for one or another variant of work - with or without touch. |
Will it reach. Some brokers cannot purchase binary options for the price not touching the level until the moment the contract is executed. In other words, you can purchase a contract " one touch"that the price will reach the level, but the option to make money on the absence of a touch is not available.
This limitation does not allow the use of strategies designed to not achieve the target level. If you don't even plan to enter into such deals, then this option of one touch options is quite suitable for trading.
Whether it will reach the level at remote placement. This type of one touch completely repeats the "will it reach" rule with one exception - the target level will be placed much further from the current market price. Naturally, it is much more difficult to work with such contracts, but the remuneration for them is also more substantial.
If companies pay for contracts "will reach", for example, 70-75% , then the broker can offer 200-400% for the considered variety (depending on the distance of the level from the market price).
| You will find some useful tips for trading binary options "one touch" in the dedicated overview. There we are talking about the intricacies of trading using such specific trading instruments. There are certain tricks that allow you to profitably buy one touch binary options. An important point | when working with all varieties, "one-touch" means that the price does not have to cross the target level and stay behind it until the moment of execution. To make a profit on a deal, it will be enough for a trader that the market price touches the target level at least once before the option expires. |
One touch binary option is a very interesting trading tool. With it, you can come up with your own strategy using various market patterns. By its principle of operation, this type of contracts is not similar, for example, to classic binary options, which makes us look for other approaches to trading in working with "touches".