Types of Binary Options Trading Rules
Learning the Main Types of Binary Options Trading Rules
There are four main types of binary options while trading. With all four types, a trader is faced with a choice between two options. Depending on the trading time frames and changes in the exchange rate, a trader can choose a type of binary options at one’s disposal.
In order to hedge the risk and make a high profit, it is better to take advantage of the characteristics of each type of binary options depending on the situation.
High & Low Binary Options
Example: “Will the EUR/USD close higher or lower than the current price in 15 minutes?”
High & Low is the most popular and representative binary options among the four types. A trader makes a prediction on whether the exchange rate will rise or fall at the time of expiration. The trading time frames are usually short, such as 10 minutes and 15 minutes. Depending on the binary options brokers, it is also possible to trade hourly or daily options.
By comparing with other types of binary options, High & Low options are available for trading several times a day, which is one of the reasons that contributes to its popularity. It is so simple that a trader just makes a predication on whether the exchange rate will go up or down, thus it is becoming overwhelmingly popular amongst investors around the world.
In addition, High & Low binary options are most traded by novices. It is often seen that the trading volume tends to increase when traders predict the changes of exchange rate minutes after the release of economic indicators. Since the payout rates are comparatively constant, one can easily hedge the risks. As a novice trader, it is better to start trading with High & Low binary options.
60 Second Options
Example: “Will the EUR/USD close higher or lower than the current price in 60 seconds?”
Basically, 60 Second Options is the same as High & Low binary options. A trader makes a predication on whether the exchange rate will rise or fall at the time of expiration. Different from High & Low binary options, a trader must predict and make a judgment on how the price changes within 60 seconds after the contract starts. The 60 Second options is the fastest way to get the trading results amongst all types of binary options.
Since the trading time frames are generally short, it is unlikely there will be large reversal in the movements of exchange rate. Whether it is an uptrend, downtrend or flat line, spotting the market trend and choosing trades that move along with the trend is viewed as low risk trading and is becoming the mainstream of binary options trading.
In trading binary options, a trader gets a certain profit percentage of the initial investments if the right decision is made. Because the amounts of profit are limited, it is necessary for a trader to win in most of the trades in order to make a profit as a whole. A trader who pays special attention to the turnover rates tends to choose 60 Second Options in which one can get the trading results in a short period of time.
Recently, there is an increasing number of binary options brokers offering 30 Second options. Compared with High & Low Binary Options, there is not much of a difference in trading. For those traders who pay attention to the turnover rates and profit margin, trading 30 Second options is usually recommended.
Touch & No Touch Options
Example: “Will the EUR/USD reach or not reach the target rate at the time of expiration?”
In trading Touch & No Touch Options, a trader predicts whether the exchange rate will reach or not reach the target rate indicated by the broker. Depending on the brokers, there is also another type of binary options where a trader predicts, between the two target prices, which one will be reached at the time of expiration.
Basically, when economy performances are released, there are large movements in exchange rate and traders can invest. Since it is usually difficult to predict the timing of trades when flat trend lines are shown in the charts, there are not many traders who choose to trade Touch & No Touch Options in this case.
Compared with High & Low Binary Options and 60 Second Options, Touch & No Touch Options are more difficult, however, the payout rate is known to be higher. If you know the timing of trading and make the right decision, it is possible to get a high return by trading Touch & No Touch Options.
Range & Boundary Options
Example: “Will the market price be located In or Out of the range between the target prices at the time of expiration?”
In trading Range & Boundary Options, a trader predicts whether the market price will be located in or out of the range between the target prices after a fixed period of time. On one hand, it is the same as Touch & No Touch Options where a trader can place a trade when there are large movements in exchange rates. On the other hand, when it is difficult to predict the timing of trading in Touch & No Touch Options, it is also possible for a trader to place a trade in Range & Boundary options to seize the opportunity.
Compared with High & Low Binary Options and 60 Second Options, the Range & Boundary Options requires a trader to be proficient in understanding the movements of exchange rate. Thus, it is difficult for a novice trader. Since prior investment experiences can be utilized as trading strategies, this type of binary options also attracts a lot of traders.
Finding a broker by types of binary options
So far, we have explained the main types of binary options trading. The types of binary options that are offered by online brokers are different from each other. Therefore, it is better to choose the right broker for your purpose.
There are a number of brokers offering a wide range of binary options and traders can adopt a lot of trading strategies. However, for a novice trader, it may be difficult to place a trade as there are so many choices available. There is no such thing as a trader who cannot make money due to the small number of binary options offered by a broker. Please keep in mind that, in order to make a profit, it is important for a trader to choose the right broker according to one’s expertise.
Most Popular Binary Options Brokers for Beginners
*Investors can lose all their capital by trading binary options.