One Touch binary options trades carry the highest risk level of all trade types. However, they also carry the highest associated return rates. This trade type requires that the price of an asset reach or exceed a set price level if they are to be profitable. If this does not happen, the investment amount is lost. The gap between the strike price and target price is often substantial, a fact which means that strong analysis is a must.
Many of the expiry times associated with binary options trades are quite short, lasting anywhere from thirty seconds to one hour. One Touch trades typically run for a period of one week. This actually works to the advantage of the trader, as the extra time can allow more room for a touch to occur. Risk levels increase as expiry periods decrease, so exercise caution when using this trade type in conjunction with shorter trading periods.
One Touch trades offer two selections, one for each type of price movement, either up or down. In order to reduce risk, traders are advised to concentrate only on assets that are set to be reported on during the trading period. Earnings reports and economic status reports can send asset prices into motion, often causing the price to trend either upward or downward for a period of time. An economic calendar can be used to determine exactly which assets will be reported on each day, along with the price change that is being predicted by market analysts.
When trading binary options, traders always know upfront exactly what the strike price will be, along with what the target price is set at. Risk can be reduced by only selecting One Touch trades which carry a smaller space between these two prices. The less ground that the asset price has to cover, the lower the overall risk level is going to be. The return rate will be dependent upon how large or small this space is, but these high-yield trades almost always carry return rates of 150% or more.
Fundamental and technical analysis can also be used to reduce risk. On the fundamental side, traders will examine market news to see which assets might be capable of touching the target price. One the technical side, price charts will be used to examine past price movement in order to determine if a touch is even possible. A few variables to consider include the highest and lowest realized prices, along with the median price since this is the area in which prices often revert to after trending for a period of time.
One Touch trades are not the best selection for novice traders since strong analysis skills are required. However, with some time and experience these trades can be used to provide a nice boost to account funds. Since there are very effective ways to reduce risk, there is no need to completely avoid this binary options trade type. So long as each trade setup is made carefully and research is completed there should be no problems.