The Three Types of Binary Options
There are three different types of binary options, also known as fixed return options. Each option type is vastly different from one another especially in terms of the specifications and profit ratios imposed on each one.
It is important to know the differences among these three types of options because choosing the right one is crucial for a successful trading strategy.
The Range option is used in predicting the chances of whether an asset and option value that has been chosen by the investor will be within or outside the identified range by the time the option expires.
A Touch binary option is based forex trading principles. A touch option is dependent on whether the strike price will be touched by the asset within the period before the option expires. If the trader is successful in determining the correct assets value and it touches the strike price before the deadline expires then it expires “in the money.” Successfully doing this can result in high returns on the investment – from 75 to 85 percent – of the trader.
The most popular option type is the High/Low option (also known as the Above/Below Option). With this option type, the investor will determine if an asset he has chosen will be above or below the previously identified strike price before the option expires. The trader will either issue a buy or sell order depending on where he think the price will be after the time frame. If he thinks the price will be below the strike price then he will issue a sell order. If he thinks it will be above the strike price then he will issue a buy order.
In all of these three options the trader will easily know how much of his investment he will expose. This also means he can easily determine his projected earnings or losses, which will help him determine the amount of risk he wants to take.
It has to be stressed that binary option trading is dependent on the trader’s ability to make a well-informed strategy based on his analysis of data and economic indicators. It is not a guessing game or a form of gambling. With careful study and research you can determine which binary option is the right one to take for a particular trading strategy.
About The Author
Mario Singh is the owner of Askmariosingh.com, a popular website that deals with fx daily reports, news and analysis.