Types of Binary Options

Now this is where you have to pay much attention to. The type of binary option (Order type) you chose to play is one of the main factors that affect Payouts tremendously.
You have got some clues on “Up/Down” and “Range” option trade as shown in our previous example. The former is the simplest type and it’s offered by most brokers, if not all. 

Predicting if a currency pair would stay above or fall below the strike price before it expires has the lowest payout. The percentage paid to traders as profit averages between 70%-90% depending on the broker.

We also have more complicated types of options like the "One Touch/No Touch” and “In-Range/Out-of-Range" binary options, which have higher payouts since winning such trades tends to be harder. From experience, brokers do offer payouts around 200%-400% and a few can even go as high at 750%.
Just imagine that!
Let’s take the various types of binary options one after the other for clearer understanding.

Up/Down Options

Up/Down option have several names. Do not get confused if you register with a broker and saw orders like; Over/Under, High/Low, and Above/Below. They are all the same. As said earlier, this is the simplest and most common type of binary option offered by almost the whole brokers out there.
What you need to do as a trader is simply buy a "CALL" option if you believe that the closing price will be above the strike price at expiration. On the other hand, you have to buy a "PUT" option if you think price of the asset will close below the strike price at expiration. 

Our previous example of GBP/USD trade shows how this kind of option works.
Now every trader believes this is the simplest type of option and also has the lowest payouts. 

The question is, why?

This is because the Up/Down options expire within the shortest time. It ranges from an hour or a day or few. There are also brokers that offer this type of options that expire in minutes and even some seconds too. The truth about this option is, your account could either grow fatter or be damaged a lot if you trade this type with the shortest time. So, it would be wise if you apply absolute Risk Management correctly.

One Touch/No Touch Options

Before we delve into this particular type of option, I would like us to share on a related game.

Do you still remember the popular saying; “All work and no play make Jack a dull boy?”

There was this game we use to play when we were kids. We will first of all pick numbers by casting lot, and the person with the last number begins as the pursuer or catcher (One who catches the runner even with just a touch,).

It’s a kind of “Touch and Win” game. 

A square line is drawn of about ¼ of football pitch with another one of the shape of an 18 yard box at the tail end of the square which serves as a bound where the runner is free even if the pursuer touches him (Expiration limit).

The “Runner” is not allowed to run outside the entire box. He will exercise every possible strategy to dodge any touch from the “Pursuer”.

If any point in time he touches the “Runner”, he WINS (the investor). That is one touch for you in this game. But if the “Runner” out-smart him using any means within the box, and runs into the second box like an 18 yard box, the “Pursuer” LOSES, and had to try again.

Well, should I say in this game, The “Runner” is the Broker and

The “Pursuer” is the investor (that’s you and I).

Note; There could be more than one runner trying to escape the touch (just like a situation where more than one position is opened up in options).

There is no doubt about this. It is indeed a replicate of One Touch option, though we play it as a game during those days.

I think we have taken enough of this story!
Never mind, there is no deviation from the subject at hand. Shall we …………………. ?

Enough of this "Mumbo Jumbo, and let's hit the hammer on the nail!

Let's take a look at what we have just read and more of types of Binary Option right now.