Myths and Facts of Binary Options Trading

Double one-touch- A binary option in which the trader receives payout at expiry if the binary reaches or extends beyond either one of the two WikiTrader predetermined barriers. If neither barrier is touched at the time of expiry, the trade is out-of-the-money and the trader does not receive a payout.

For example, if a trader buys a double one-touch option at a price of 5.45, with 5.49 as the upside barrier level and 5.41 as the downside barrier level and the option reaches either beyond 5.49 or below 5.41, his trade is considered in-the-money and payout is received. This is a good trade for instances in which an economic report is due to be published and the trader believes it will affect the price of the option in one direction or another. It is especially popular in the forex market.

One-touch (also called Lock-in or Touch Digital)- A binary option in which the trader receives payout at expiry only if the binary reaches or extends beyond the predetermined barrier. Traders use this option when they expect the price of an option to reach a certain amount, but are not sure that the option will remain at that amount. This type of option is especially popular in the commodities and forex market.

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