• Category: Beginner

What Are Double One-Touch Binary Options?

What if you could profit from trading binary options even if your prediction about the price movement of an asset is not correct?

What Are Double One-Touch Binary Options?

What if you could profit from trading binary options even if your prediction about the price movement of an asset is not correct? Double one touch trading is very popular among traders as it allows you a greater window of being in the money, compared to the basic put or call option trading.

How does this work?

In double one-touch trading, you can set two trigger points—one above the spot price and one blow this spot price. If your predicted price reaches any of these trigger point within the expiry period, you will be in the money and will receive your profit payout. While you can set your own trigger points, some brokers will have already set the points.

Traders often use this type of options trading to mitigate risk, a technique known as hedging. The problem with hedging is that the resultant payout is not usually high. Perhaps the secret to leveraging the double one touch strategy is consistently executing high probability trades. High quality trades allow you to accumulate profits in spite of the inherently low payout.

This strategy will especially come in handy when there is an anticipated breakout and there is no clear indication which side the markets will swing. When you are unsure whether the price trends will move up or down, executing a double one-touch trade is evidently the best way to mitigate possible loss while also leveraging on the probability of making a profit.

Essentially, a double one-touch strategy allows you to take a position on either side of the asset’s spot price. So, whether the prices go up or down, you stand to profit if your predictions hit either of the price points within a given time period. Of course, this does not mean a trader wins irrespective of the market conditions and trends. Sometimes, the prices may not get to a breakout point and may continue with their consolidation trend. In such a case, you stand to lose. Also, you are also set to lose your trade if the price of the underlying asset moves up or down after or before your targeted expiration period.

Here’s a quick example on how the double one-touch strategy works:

Say you are trading the USD/JPY currency pair at an exchange rate of 1:113. According to the available technical and fundamental analysis, you anticipate that the dollar’s value will strengthen against the Yen. On the other hand, there is the anticipation that external factors may cause the value of the dollar to potentially decline. To leverage the anticipated strengthening of the dollar and to hedge your bet against potential decline in the value of the dollar, a double one-touch option would be your best bet. This way, there is a higher chance of being in the money regardless of how the markets move.

All in all, hedging may help in protecting your bet from potential losses but this is not a guarantee of winning. The double one-touch technique works best when you have an understanding of market consolidation and potential breakout points.

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