Touch No Touch Options Strategy
Touch no Touch Options are a binary options type that provides the highest payouts of all binary options. A successful trader of touch options can make higher profits than with any other option type. In this article we aim to discuss with you some possible tools that you may use to trade touch no touch options.
For those of you who are not familiar with no touch options they basically are the exact opposite of one touch trading strategies. Basically, you are predicting that the price value of one asset will or will not reach a certain lower or higher price barrier. Correctly predicting may mean you could see a potential return of up to 300-500% profit on initial investment.
“Your capital may be at risk. This material is not investment advice.”
Touch and no touch options are a great way for you to further customize your trading experience. Because there only two different outcomes that can possibly occur, these are still considered to be binary options. You can be right or you can be wrong. There is no middle ground. Even though they are slightly different from the traditional call/put option, they are still a powerful tool that you can use to your advantage in the fast paced world.
How to use Them?
Touch no touch binary options can play an important role in anyone’s binary trading. They become especially useful during times of market volatility when prices might be uncertain. For example, if an asset’s price is wildly going up and down, you might have no clue about where the price will be a half of an hour from now, but you can say with a degree of certainty that the touch price will probably touched upon, even if it is for only a very brief moment. In instances like this, touch/no touch trades can be extremely powerful.
Using the average true range (ATR) to estimate the market range
The average true range is a technical indicator that measures how far the market has moved on average over the last periods. While the market could slow down or speed up in the future, the ATR gives you a good indication of the possible range a movement can have in a given time.
- Forex traders can use ATR to gauge market volatility.
The average true range indicator is an oscillator, meaning the ATR will oscillate between peaks and valleys. The ATR has no upper or lower limit bounds like the RSI or slow stochastics. The other unique characteristic of the ATR is the value of the indicator is based on the price performance of the stock in question.
If you are expecting a long movement for example and your binary options broker is offering you a long touch option you can use the ATR to determine whether it makes sense to invest in this touch option by comparing the touch option’s target price to the ATR.
In order to calculate the average true range, you take the average of each true range value over a fixed period of time. For example, when calculating the average true range for a 14-day period you would take the average of the true ranges over 14-days.
Should the distance between the touch option’s target price and the current market price be twice as much as the ATR’s value, you know that it should take the market about two periods of time to reach the target price. As long as the expiration time of your option is longer than two periods, you are looking at a profitable investment opportunity.
Since the ATR predicts that the market should reach the target price in two periods, you know that you have a good chance to win this touch option. Should you find a touch option with an expiration time shorter than the predicted duration of the movement, you should not invest in a touch option. In that case, you can trade the breakout with a high / low option.
Using a second indicator to complement the ATR
To trade the touch no touch options as outlined in this article effectively, you could use a second indicator that generates the trading signal. With the ATR you can then evaluate whether it makes sense to invest in a touch option.
Trend followers could also use a moving average or a moving average crossover technique to generate a trading signal. Once they receive a signal, they could use the ATR to evaluate whether they should invest in a high / low option or a touch option.
The ATR is a powerful tool, which I use in both my day trading and swing trading activities and can be a useful tool in trading touch no touch options. As you further explore the indicator, remember that the real power of the ATR is in its ability to judge the “volatility” and the “calm” in a security.
Trading binary options with the no touch style can be difficult to master but as long as you apply this strategy correctly then you should have no problem seeing huge investment returns. If you are interested to get started with the No Touch feature, keep in mind that most brokers some brokers may not offer it. But some Top Options do have this facility.
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