Such options are a very good opportunity to raise profits. Profit motive has become the main contributing factor to the popularity of One Touch trading. A deal usually yields you an 85% profit. For example, if you buy £10 option your revenue will be £18.5. This is a very good figure considering that options trading involves small risk (compared to Forex and other exchanges).
It’s natural that traders want to have maximal profits and 85% is definitely not the biggest possible income margin. One Touch options were created by brokers for this kind of traders.
What is “One Touch”?
“One Touch” binary options can’t be considered classic because there are several factors to be accounted for: price fluctuations compared to the current level, the trend it will follow, and how far will it be from the point where the position was initially opened.
To make One Touch option profitable for a trader, a point which will be eventually reached by the price diagram shall be indicated when opening the position. Working principle is quite simple. Should the price hit this point, the option is considered to be profitable and you get your income. How much? Depends on how far was the point which you selected from the initial price when opening the position. Every trader can choose their winning amount.
By using One Touch option you can raise a decent profit which may range from 100-500% and even higher. In other words, if lucky, you can make £500 with just £100 on your deposit having just one deal with the option period which can be very short. This is why binary options are so popular.
Pros and cons
We should consider advantages and disadvantages of options. The main advantage is that a trader can earn quite a lot. If you use the opportunities provided to you by such options, the quantity of the deals will not be fewer than if you used Call/Put dealing but your income can be significantly higher. However, you should keep in mind that the risk of loss is very high too; therefore, if you trade One Touch options you should exercise a serious approach to every deal, that will be less frequent.
The second advantage of One Touch options is that it’s enough for the price to just touch the point that you have previously selected. Just one single touch is enough. There is no difference where the price will be at the moment of your option expiration, above the level or even below the opening point. Should the touch take place, you automatically earn the money. The majority of brokers consider One Touch option exercised at the moment when the touch occurs. Therefore, the following situation is possible,- you open a long position, for example, for several days but, if lucky, your open position can be closed after several hours, fixing your profit. Many traders appreciate the convenience of such function.
Now let’s talk about the downsides of One Touch. The main problem is considerable risk. Nevertheless, such risk is acceptable considering that the profit is much higher than the loss should you trade other options.
However, One Touch don’t tend to be options with a regular profitability. If you analyse the relevant statistics, you will see that the probability of a successful deal using Call/Put options is approximately 50%. The price can only go up or down. As for One Touch options, the probability of a successful deal is inversely proportional to the distance to be passed by the price from the initial point. Therefore, it is important for a trader to calculate risk factor correctly and not to try to make huge money when the probability to do it is low. It’s better to earn less but on a constant basis and with a high probability of the desired outcome of the deal.