In many ways, range, no touch and boundary trades are quite similar. Each of these digital options relies upon an asset price not arriving at or surpassing one or more target prices. Each of these trades can conclude before the expiry runs though its full cycle if targets are touched or surpassed.
Even though these trades do have some things in common, traders need to know their differences as well. It will be these differences that allow you to know when to select one of these trade types above others.
The most significant difference between the three is that boundary and range trades involve two different price points, generally one high and one low. Each no touch trade will only include one target.
In order to earn money from a range or boundary trade, the price of your selected asset must remain somewhere between the high and low targets throughout the entire expiry time that the trade remains open. In order to earn money from a no touch trade, the price of the selected asset must not touch or surpass the single target at any point while the trade is live.
All three of these trade types work best whenever they are used in conjunction with underlying asset prices that are moving sideways, exhibiting stability, and show no signs of moving erratically.
Having said that, there will be the chance to generate some profits even if asset price movement is slightly erratic, but this will likely only happen if the strike price and the target price, or prices, are not close together.
More substantial spreads are likely to decrease the profit potential. But then many who actively trade binary options are fine with earning smaller amounts and building up earnings at a slower pace.
In general, range and boundary trades offer the highest return rates simply because they often involve smaller gaps. When presented in the form of a high yield trade, the prospective profits can be massive.
Never forget that it will be your task to look for underlying assets that are going to make for simple price movement forecasts and thus provide you with the best odds of earning money from either range or boundary trades. You’re likely to discover over time that there are some asset classes that offer larger numbers of more stable underlying assets for these types of trades.
In regard to the aforementioned asset classes, it will often be wise to avoid the extremely erratic currency class unless you can be certain that the up and down movement is going to remain within a tight range. Stocks, commodities, and indices should all present plenty of underlying assets that can be used in range, boundary, and no touch trades.
The truth of the matter is that one should never completely overlook any asset class when trading binary options. By placing self-imposed limitations on your trade options, you place limitations on your ability to profit.
Since all three of these trade types are similar at their root, you may need to turn your attention to simply selecting the very best trade setups. Several Brokers provide traders with a number of different expiry times to choose from, but do not expect to see any of these trade types offered along with super-short expiry periods.
Do spend some time carefully contemplating the most optimal expiry time, because these often are the determining factor between profit and loss. Remember, the longer the expiry, the more time the asset has to touch or surpass the targets.