The premise of binary options trading is that you have to determine whether the price of a particular asset is going to rise or fall. Of course, this must be considered within a set time period. While the concept of this form of trading is simple, there are other aspects to it.
For instance, there is more than one type of trade. In order to succeed with type of trading, there must be an understanding of the types of binary options trading. This will give you a greater variety to select from, thereby giving you a greater advantage. Here are the most common types:
Call/Put or High/Low Trades
This is the most basic type of trade and the one that traders are most familiar with. This is because it is very easy to place. You simply have to decide whether a particular asset will be trading at a value that is lower or higher than the current price, at a specific time.
For a value that is higher, you will place Call while a lower value will require a Put response. The time interval for such a trade can vary anywhere from several minutes to hours long. This type of trade actually goes by many different names. It largely depends on the broker that you are dealing with. You may find yourself hearing terms such as Call/Put, High/Low, or even Up/Down. They essentially refer to the same thing, however.
One Touch and No Touch Trades
Then you have got one touch and no touch trades. They are quite different from one another but follow the same concept. One touch is about deciding whether or not a particular asset is going to reach a certain price point before the trade expires. Now, this price point can be anywhere – however, the farther away it is, the more likely that you have a greater payout. At the same time, you will be taking on greater risk.
With No Touch trades, you are deciding that the asset will not reach a particular price point by the time that the trade expires. There are also variations of the One Touch and No Touch trades. These are called Double One Touch and Double No Touch Trades. This is when the trader decides on multiple price points rather than just one.
Short Term and Long Term Trades
One of the lures of binary options trading is the fact that traders have the options to have incredibly short term trades. One of the most popular, in fact, are the 60 second trades. These are offered for both Call/Put as well as for One Touch trades.
As the name suggests, the trade does not last for more than a minute. The short term trades can last anywhere from thirty seconds all the way up to several minutes or even a couple of hours. The long term trades are slowly becoming more popular, especially as more brokers are making it available to traders. These can go on for days, weeks, or even months, depending on the broker.
Boundary or Range Trades
As the name implies, boundary trades are when the trades are based on the upper and the lower limits of the price points. Typically, there is a price that a particular asset will not go beyond or drop below. Of course, in extreme instances this may happen but for the most part, a channel is created between these two price points.
Here, you are determining that the price will not go above or below this range. If you are right, you win the trade and if not, you will lose your money.
These are the most common types of binary options trading. The key to maneuvering trades is to understand the types of binary options trades and utilize them to your advantage.