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  Touch options
  Touch options are part of every binary option broker’s repertoire. We will explain this type of trade.

Touch options are traded as binary options in different variants as touch up or down, double touch, and no double touch. This choice of words is quite self explanatory. Certain set upper or lower price limits will be touched or not, the respective event will constitute the success of the binary option.

The basic mechanics of touch options
The basic issue is the touching of price limits, which implies a speculative quality different from that of predicting if a rate rises or falls. The very specialized variants of one touch, double touch and double no touch options are suitable for sophisticated traders who can foresee quite precisely within what range a rate likely will move or not move. To speculate on the touching of price limits, regardless of the rate ultimately leaving the range or not (which in turn is covered by the different rage options), implies a playful quality and may derive from the dealings of private traders at the exchange.

Originally of course options were meant to help safeguarding real trade deals; however they are also objects of speculation in their own right which is quite legitimate. Many private citizens also buy shares in enterprises in which they are not seriously interested, just to realize speculative gains. Therefore if the exchange sanctions speculation, then – according to binary option brokers – it is admissible to truly speculate: will the rate touch this or that price limit or not? For better understanding by speculators who via binary options are just discovering the exchanges themselves: Even with classical options, other derivatives (knockouts, CFDs) and shares, currencies and commodities, speculation on price limits is common. For they constitute the buy and sell stops of small private as well as large institutional investors. With binary touch options this purely technical concept now becomes the basic trading principle.

Pfeil grün Trading touch options in practice

With a touch option the trader predicts if a price limit wil be touched or not, with the double variants two price limits will be touched or not. These very exotic binary options require either a certain affinity for playfulness or else a very deep market experience. Basically price limits can be fixed above or below the current value, thus two things have to be considered: the direction and the limit. This makes a prediction more difficult, which is why here many brokers offer very large returns of up to 400 percent. The discerning reader may now infer that in this way the exchange resembles a casino ever more closely, but that is and has always been the case. There is nothing reprehensible about this, objectionable is only that banks whose players have lost are being rescued with our tax money. By contrast as a private trader you lose your private money, which hurts no one but yourself.
The decisive factor for touch options is not that a certain rate will have to be reached at expiration time. It is sufficient that during the run time the price limit will be touched or not touched. At the moment of touching the trader will have won (touch option) or lost (no touch option). There are the following types:

Touch up/down options
A price limit will be set above or below the current value. Once the rate touches this limit, the trader wins. How the rate behaves subsequently is irrelevant, it can revert or continue to move in the same direction. Touch up or down options anticipate high volatility, meaning a wide range of market fluctuation. This however is just as difficult to predict as market direction; therefore touch options may appear easier than they actually are. As a trader, also remember that it is the broker who determines the particular price limits, not you. Otherwise these options would be much easier to handle.

No touch options:
Here the concern is the opposite, namely the not touching of a price limit. A similar binary option is the range option, albeit with a small but important difference: with the range option the rate can touch the price limits as long as it ends up within the range at expiration time. With the no touch option the rate just must not touch the price limits.

Double touch / double no touch options:
Here the objective is the touching of two price limits, above and below the initial rate, or conversely just the not touching of those two limits. Traders interested in these exotic options should study the broker provided limits very carefully. They could have been determined quite reasonably or in a highly speculative way – in the latter case one should stay away from these options. Unless you just want to play around with very little commitment.
Touch options appeal to traders who are somewhat fed up with ranges, which is quite common. Therefore it is quite appropriate to add them to the mix.

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