Binary options trading has a lot of trading styles. Starting form High or Low only it has come a long way ahead and made the trading even more interesting by introducing new styles of trading. Touch option is a trading style which is very unique in its own ways.
Understanding touch options
Touch options like any other binary options trading type has only two outcomes – touch or no touch. You may find the same trading style with different names like Touch, One Touch, Touch or no Touch depending on your binary options broker.
In touch options your binary options broker defines a price level of an asset. You can invest money if you feel that the price level of the asset will touch that specific price level. This predefined limit is generally higher than the current price level but at times this level can be lower too. It depends completely on your binary options broker and you cannot alter this level.
The most interesting aspect of the touch options trading is its payout. The payouts for touch options are the highest. You can win up to 500% of the invested amount if the price level of the asset touches that predefined price level. The average payout for touch options is about 300% and it is significantly higher that other trading types.
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Touch options are valid for an entire week. It means that if you have invested money predicting that the price level of an asset will touch the predefined price limit, you will win if the price level reaches that limit even once in a period of one week.
Mostly commodities and currency pairs are traded in touch options trading. This option is very useful for trading when you feel that the price of an asset will exceed or get below a certain level in the future, but you are not sure if the change will be sustainable.
Trading touch options
For trading touch options, most of the brokers have a different system regarding your investment amount. You can invest money only in terms of units and one unit is equivalent to $25. It means that you can invest money only in terms of $25. For trading touch options you need to select an asset and enter the number of units you want to invest.
A percentage figure corresponding to the asset name indicates the potential payout. Let us assume EUR/USD closes at 1.35130 on at the end of trading hours on Friday and your broker has set a price level of 1.38130. If you use the call options it means that you will win if EUR/USD reaches that limit even once in the entire following week.
When to trade touch options?
The limits defined in touch options have a good margin and the asset will not reach the limit in most of the cases. It is for the same reason that the payouts are so high. However, if something remarkable happens which will affect the price of the asset, you can take a calculated risk and make an investment.