The binary options market is home to many passionate traders who are interested in stocks, commodities, currencies, futures, etc. Binary options differ from the futures, Forex, and securities markets in one major aspect; namely, traders do not buy any assets, but simply make bets on the price movements of the assets. New binary options styles are being developed every day, and provide for an even more dynamic trading experience. One of the favorite types became also the One Touch and No Touch Options. This review will focus on the No Touch option and its main features.
What is No Touch Option?
This option is the counterpart of the One Touch Option. They go hand in hand and work on the same principles. The One Touch option refers to predicting that an asset will hit the target price in a limited time period and if it does, the trader can collect their profit. The No Touch option is merely the opposite; traders bet that the actual or spot price will not hit the target price determined by the broker, but will remain in the safe range not touchingone of the two target prices (at the lower or upper end). Some brokers enable traders to set their own levels (to specify the target prices). If the asset price reaches the target before expiry time is up, you immediately lose your investment. Even if the price touches the target just for a second and bounces back for some reason, never touching it again, you still lose your investment.
Example of the No Touch Option
Let us create a trading situation where the No Touch option is applied. A trader is contemplating to place a trade on copper, whereby an ounce of copper amounts to $ 2.345. He sees that his broker displayed a target or strike price of $2.352. Based on his belief that copper prices were thoroughly stable for a steady period of time, and that it is unlikely to reach that point, he places a trade by selecting the No Touch option. The expiry time can be set at 2 hours, 24 hours, etc.The investor’s trade will be profitable as long as the copper price does not reach or exceed the $2.352 in the specified period of time. If the actual price overlaps with the target price, the trader loses his investment. The trader can also trade the other way around. He can opt to bet that the price of copper will not fall below $2.335 for example.
No Touch Option Strategies
Traders always have to be aware that serious trading requires a serious strategic approach. Random trading mostly results in losses of large amounts of money. Therefore, if you want to be profitable in this market, you have to examine the various strategies and tactics which will help you make decisions based on analytical studies. If you want to bet on an asset, examine the price movement history of the asset, watch the news for indications of major changes, etc. The market is an all-around- the- clock task, if you want to turn investments to profits. The history of asset prices can tell you a lot about the behavior of particular assets and what changes have the biggest impact on them. Once you learn how to apply your knowledge on the market, you will notice an increase in correct predictions.Make use of the numerous educational materials and resources offered by every broker to enhance your trading skills and to learn how to correctly apply strategies.
Potential Profit
As opposed to the One Touch option, with the No Touch option, the potential payout will be lower if the distance between the spot and the target price is wider. A narrower range between the spot and the target price offers higher profits, but carries also a greater risk. Let’s reflect on our copper example. With an actual copper price of $ 2.345 and a target price of $2.352, the return rate can be set at 70%. This means that if the target price was set at 2.365, the return rate would be significantly lower, maybe 55%. With such a wide range between the prices, the risk is significantly lowered, increasing the chances of traders to actually win. It is not a secret that higher risks come with higher potential profits, and traders have to find the fine line between entering risky propositions and passing on them. It is not easy to find that line, especially for casual traders who are not committed to studying the market.
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