Many of the brokers use different terms for types of binary options. Some simply call it up / down or high / low, others use the term financial / call / put. But what they all have in common is that the types actually do not differ.
For the layperson, it is a bit confusing at the beginning and he wonders why the same types of options cannot always be called the same. Actually it doesn't matter, because so far there are only the common types of options and not many. After a while, every retailer will find out and the distinction will be easy.
It is not necessarily difficult to differentiate between the simple options, but there are some that are somewhat more complex in understanding. Accordingly, building trading strategies for these options is less interesting and traders are often reluctant to deal with the types. Therefore, in this series we briefly present the respective option types and a strategy that should bring you closer to understanding.
The one-touch option
The one-touch option is used by other brokers also known as the hit option. We believe that both terms are clear and it is immediately clear what is meant by them. A previously determined price zone should be dipped or touched once.
The difference to the classic up / down option is not particularly big, because here too we have to choose a direction. So either hit or no hit. The one-touch option is conceivable for two strategies. Depending on what price the broker gives us as the target zone. If the price is below the current price level, we first have to determine whether an upward trend might not develop.
First, let's look at the price trend at the broker. We see that on a short-term basis the rate failed in a range around 0.90775 Aud / Usd. This could be an indication that the price continues to give way and reach the target price within the next half hour. As a precaution, we should also look at the somewhat longer-term chart. For example the 15 minute chart for the currency pair Aud / Usd.
Now we have a completely different picture. Only now can we see which trends are present and assess the situation very differently. What we immediately notice is the strong support zone directly below the target price. The price tends to fluctuate strongly in this zone. If we take a closer look, you can see a kind of sideways movement.
As we know, in a sideways movement it is a little difficult to make a decision about the direction, but it is not impossible. Since one-touch options give us the choice between hit or no hit, but the target price is directly above an important support zone, "no hit" would have been the better choice. Especially on a short-term basis, you can expect the course to turn back to this support or even before. Some brokers meanwhile also differentiate between hits "around" or "before" a certain time. The dealer should pay particular attention to this. Because just the indication "um" indicates that the chance of no hit is much higher here.
High Yield Hit Options
How do the highs differ -Yield hit options from the simple hit options? High yield is the English term for a high return. This means that this type of option promises a higher return on use.
The subtle yet important difference to the classic hit option can be found here in detail. While we have the choice between hit and no hit with the hit or one-touch option, we are left with no choice but to decide that the market price should hit the target price before the term expires. In simple words: it only makes sense to buy the option if we assume that the market price also meets the target price, otherwise we abstain. Now it is becoming clear why we can achieve such a high yield here.
But let us not be unsettled by this, because after all we know that there is nothing like a decent chart analysis, no matter which option you want to trade, So let's take a look at the somewhat longer-term chart for the currency pair Gbp / Usd.
If we look closely, we see an upward range in the 15-minute chart with the current falling price. Our target price, however, is slightly higher. That means that in order to buy a high-yield option, we would first have to assume that the price will run up again. And even then, we can already see that the target price is above the last resistance at which the price has already rebounded on a short-term basis. If we consider the short term of the option, our chances of winning decrease more and more.
The purchase of a high-yield hit option should therefore always be considered carefully. A certain amount of previous experience and a good overview of the currency pairs and their dynamics should already be available in order to be able to assess the situation additionally. Then a high yield hit option is not a bad alternative to the classic hit option. Because just deciding whether to buy or not to buy can actually reduce risk.