Trading with binary options can be a lot of fun – not only because they are easy to learn and they provide opportunities to gain a large amount of money in a short period of time, but also because this trading activity comes with a large number of different alternatives that you can use to trade profitably. The reason for this is hidden behind the fact that the market – respectively the different brokerage companies – offers a diverse abundance of different binary option types. Learning them is not only recommended, but considered mandatory for you, because once you are equipped with the necessary knowledge you will be able to build up the best trading strategy.
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Why is It So Important to Be Aware of The Different Binary Option Types?
Before listing the different binary option types for you– with details and a simple explanation of each – we must say few words regarding understanding them. Some of you might not be so eager to learn new things – especially if you are in the early phase of your trading education and the amount of information seems too much for you. You may ask us “Isn’t it better to focus on a particular binary option type in order to make it even simpler when it comes to trading in a real environment and in real time on the market?”. Well, no, it is not. On the contrary – there are many advantages of knowing the entire list of binary option types. And if you still have any doubt about it, read about them below:
Becoming a professional in trading is a must – If you think that being an average trader will allow you to earn a decent profit, you are wrong. On the contrary – to highlight the best of your analytical skills and for the best trading opportunities you should be armed with a high knowledge base. And when it comes to binary options trading, knowing the types of binary options is the least you must know to be prepared.
The more binary options available, the more options to profit – The more binary options you trade, the more opportunities you will have to eventually increase your final outcome. This is not a trading maxim, this is in general a lifetime axiom. When you have more opportunities to try, the potential to gain what you are struggling for increases.
Adjusting to the market movements – It is essential to adjust your binary options trading strategy to the market movements. To this end, we suggest that you constantly keep up to date on the economy and news flow relating to the economy at all times. These are your main sources of important facts to consider and then to trade utilising this information. With binaries things are the same. Some binary options would be more preferable in a certain market, however, others will not be suitable for trading when the same event takes place.
Improving your education and skills – Practice is everything, and the deeper experience you have, the more advanced you will become as a trader with binary options. However, there is no way for you to advance and to practice your skills or knowledge if you are trading only with the binaries you are aware of. It is better to become an expert in each of them.
Knowing your strong points – Keep in mind that some traders are considered professionals in 60 seconds binary options, but others just cannot get used to them and they prefer the one touch binaries. If you know all the binary option types and you start practicing trading with each of them, eventually you will see in which one you are an expert and you will focus your strategy to this particular type of a binary.
Discover the Different Types of Binary Options Now
And finally we have reached the main part of our binary option types theme. Let`s review and learn the list of binary option types together! Are you ready? Well, let`s get started then.
High / Low Binary Option Type
The high / low binary options make you ask yourself a question whether the traded asset you have selected will eventually become higher or lower than the previously announced value. The key moment is the expiration date – aka the time, when your prediction is supposed to happen. Note that in trading with these binaries the payout for each trade is predetermined in advance and it is always transparent to you. In most cases you are able to select to sell the option at any time before expiry, for a partial return.
Put / Call Binary Option Type
This binary option type is highly popular amongst traders. But be aware that it is similar to the previously mentioned high / low binary option type. So whatever term you see, the meaning and the explanation, as well as the binary trading philosophy remains the same. Another good type of options is 60 second binary option which is one of the most common instruments of the binary options traders.
One Touch Binary Option Type
The one touch binary option pays out the trader`s profit once the price of the underlying asset reaches a predetermined barrier. This barrier is known by the term “trigger”. Once the trigger level has been reached, you will be able to get your final outcome – either a profit, or no return. One touch binary options are one of the most preferred types for the trader in the case when he is 100% confident that the asset’s value will generate a strong move in a particular direction (up or down) and will hit the trigger value.
No Touch Binary Option Type
No touch binary option is the opposite of the previously mentioned one touch binary options. With no touch binary you decide whether the underlying asset will not be able to reach the particular value level. Though, just like one touch binary, the trader is supposed to choose the certain price amount above or below the present price through the market changes. Your trade determines if the price will not reach the determined level during the mentioned expiry date.
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In both cases – no touch and touch – a double binary option type has the same philosophy as the previously two mentioned option types with the difference that there are two triggers here. Each trigger covers each side of the market price.
Range Binary Option Type
This type of an option usually refers to the high / low binary option type. The difference appears when the trader determines the direction and upper and lower limits of the price change, which is the suggested range. If the option expires without breaching this range, you will receive your profit, because you will be in the money.
Boundary Binary Option Type
Trading with boundary binary option suggests the same methods as those from range binary option type. On the other side, the similarity to the touch binary option – one and no touch – is also very obvious. Here, though, you define two levels of the asset price. A deeper explanation of boundary binary options is here.
Short-term Binary Option Type
The short term binary option is the high / low binary option. Though, here the periods of time are shorter than the previously mentioned 15 minutes. Short-term binary options can be the following types: 60-Seconds, 2-minutes and 5-minutes. These binaries are very preferred by the trading community since they are very quick for trading and even quicker, when it comes to the expiration time and the payout execution. Though, you need some very strong intuition and good skills in fast reaction to the market changes if you want to trade with the short-term binary options types. Imagine that you are already on the best binary options broker site– what binary option type will you prefer? Isn’t it just better to consider testing and trying them all till you find out which one you are good at? Different binary option types might distinguish according their expiration date, as well as according to their specifications, but all of them are excellent ways to make fast money without the necessity of huge analysis and reading. Consider each of these types and do not hesitate to share your experience with them! We wish you good luck and great trading experience with the binaries!
3 Types Of Binary Options
The main factor when talking about payouts is the type of binary option traded.
The option trade example given in the previous section is a type of an “up/down” option and is considered the simplest kind.
Predicting if a currency pair would be above or below the strike price before it expires pays the lowest return.
Meanwhile, the are more complicated kinds of options like the “touch and range” binary options, which have higher payouts since winning such trades tends to be harder.
Up/Down Options
An Up/Down option can go by a few different names: High/Low, Above/Below, and Over/Under. It is the simplest and most common type of binary option.
Traders simply purchase a “call” option if they believe that the closing price will be above the strike price when the contract expires, or buy a “put” option if they think that market will close below the strike price at expiration.
The EUR/USD trade example given in the previous section illustrates how an Up/Down option typically works.
Easy enough, eh? The simplicity of this option is why Up/Down options usually have the lowest payouts.
Up/Down options typically expire within an hour or a day, but some brokers are offering options that expire in minutes. Heck, some even expire in seconds!
Of course, this could either do your account a lot of good or it can cause a whole lot of damage. Make sure you manage your risk properly!
Touch Options
One Touch option trades don’t require the market to be above or below a certain level at expiration. Instead, it just needs to TOUCH the strike price at least once during the option contract period for it to be profitable.
No-Touch trades, on the other hand, require that the market price DOES NOT TOUCH the strike price during the life of the contract for a trader to make profits.
For example, let’s say that EUR/USD closed at 1.3100 on Friday.
Over the weekend your broker offers a call option where you will profit if EUR/USD touches 1.3450 at least once next week and a put option where you will profit if the pair touches 1.2750 at least once in the same period.
You decide to take the call option. You find that during the option period EUR/USD had reached a high of 1.3600 before it closed at 1.3050.
Since the market reached the call option’s strike price (1.3450) within the option period, you would have won the trade even if it didn’t close above the level.
On the contrary, those who took a No-Touch option on the same price would have lost their trades since the pair DID touch the strike price.
Touch trades typically work out well when volatility picks up while no-touch trades are ideal for pairs that have a tendency to consolidate.
Still not exciting enough for ya?
You can also try out Double Touch/Double No-Touch options!
They are just like Touch/No-Touch options, only with two strike prices. The asset’s price has to touch (or not touch) two different levels for a trader to win the trade.
Range Options
Trading Range/Boundary/Tunnel options is a lot like playing the Super Mario underwater level wherein Mario cannot touch both the top and the bottom of the screen.
For In Range trades, the market price must stay within a predetermined range and avoid touching the two strike prices within the option period in order for your trade to be in-the-money.
Some brokers offer Out of Range options where traders can profit if price breaks out of the predetermined range within the option period.
For example, EUR/USD is currently trading at 1.3300 and the ECB interest rate decision is minutes away.
If price doesn’t reach 1.3280 or 1.3320 within the option period, then you would have won your trade.
That should be awesome news for you because range options usually have the highest payouts with a few brokers offering between 200%-750%!
Range options are best used when volatility is low, although some brokers offer the option to take a risk on the idea that price WILL break out of the predetermined range.
Alternatively, a few brokers also offer options on predetermined ranges that are far from the current market price.
Binary Options
What are binary options
A binary option is a type of option with a fixed payout in which you predict the outcome from two possible results. If your prediction is correct, you receive the agreed payout. If not, you lose your initial stake, and nothing more. It’s called ‘binary’ because there can be only two outcomes – win or lose.
Advantages of binary options trading
Aside from the simplicity of its ‘yes or no’ proposition, binary options trading is also very flexible. It gives you the ability to trade:
All markets
Trade on underlying markets that include Forex, indices, commodities, and more.
All market conditions
Predict market movement using up/down, touch/no touch, and in/out trade types.
All durations
Take a short-term or long-term view with trade durations from 10 seconds to 365 days.
All payouts
Earn payouts up to USD 50,000. Losses are limited to your initial stake and nothing more.
Why you should trade binary options with Binary.com
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All conditions and durations
All markets and conditions Trade currencies, indices, commodities and more in rising, falling, sideways, quiet, and volatile markets
Short to long-term durations Choose timeframes from 10 seconds to 365 days
Competitive and transparent pricing
Sharp, benchmarked prices Receive prices that are benchmarked against interbank rates
Transparent risk and potential reward Know how much you will win or lose before you purchase the contract
Protect your profits Sell your long-term contracts before expiry to protect any profits you may have made or to minimise your losses
Two-way pricing Receive quotes for a trade and countertrade, so you always get unbiased, transparent rates
Ideal for new and experienced traders
Low minimum stakes Deposit as little as USD 5 to start trading
Trade according to your preferred strategy Trade based on “gut feel” or rely on technical and fundamental analysis
Flexible Choose from over one million possible trade variations at any time, and customise your trades according to your preferred strategy
Scalable Earn the same proportional return on stakes of all values
How to trade binary options
Binary options trading is relatively easy. You can purchase a contract in just three steps:
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