Types of binary options – the more profitable to trade?
According to one independent expert, Binary Options, there are even weather changes. In his own words, he wanted to emphasize that the terms of option contracts can be absolutely anything. However, brokerage firms offer the average trader, as a rule, the following options.
Type 1. Above / Below Options
The most popular type of option contracts. The trader assumes that the price will be higher than the current value, or lower. For example, if I buy the option “higher” and the American currency will rise in price at least by a penny – my profit. Instead of the dollar, there may be a bitcoin exchange rate, and indeed, anything.
Transactions of this type are recommended for both beginners and professionals. Price fluctuations can be predicted based on simple technical analysis methods, so there will be no particular difficulties in trading.
Another important point. “Higher / lower” is a fixed-income option: the trader’s earnings do not depend on anything, he is taken for granted, unlike the contracts of the following type.
Type 2. Touch Options
It is necessary to predict whether the price will affect a certain time interval of one or another level (most often there are two of them – above and below – you need to choose any). The price will stay outside the level or not – it does not matter (but sometimes this parameter matters), the main thing is that the touch is fixed.
Agree, it’s more difficult to predict the movement, and therefore the stakes here are higher. If you plan to trade touch options, read about measuring average volatility (volatility).
Type 3. Simple Barrier Option or Range
A complicated version of the second type of options. Now the price should not touch one of the levels, but hold on to it. The trader predicts whether the price will be above the upper or lower level to the expiration date.
So, there are three types of options – with one level, with two levels per touch or “step over”. All the rest of the variety that is found on the sites of brokerage firms is a derivative of the three species we have examined.