One Touch strategy

1. One Touch Strategy: A Beginner's Guide

The "One Touch" strategy is a popular binary options trading strategy that aims to profit from significant price movements in a short period. It's considered relatively straightforward to understand, making it attractive to beginners, but mastering it requires careful analysis and risk management. This article will delve into the intricacies of the One Touch strategy, covering its mechanics, applications, advantages, disadvantages, risk management techniques, and related concepts.

What is the One Touch Strategy?

The One Touch strategy centers around predicting whether the price of an asset will "touch" a predefined price level (the "touch barrier") before the expiration time of the option. Unlike standard High/Low options which require the price to be *above* or *below* a strike price at expiration, One Touch options only require a brief touch of the barrier. This means even a momentary spike to the barrier level results in a payout.

Essentially, traders are betting on volatility. They're not necessarily predicting the direction of the price, but rather that the price will move *enough* in either direction to reach the barrier. This contrasts with directional strategies like Trend Following which rely on predicting the overall direction of the market.

How Does it Work?

When you choose a One Touch option, you'll be presented with the following:

• **Asset:** The underlying asset you're trading (e.g., EUR/USD, Gold, Bitcoin).
• **Touch Barrier:** The price level the asset needs to touch. This is set by the broker.
• **Expiration Time:** The time remaining until the option expires. This can range from minutes to hours, or even days.
• **Payout:** The percentage of your investment you'll receive if the barrier is touched. Payouts for One Touch options are typically higher than those for standard binary options due to the increased risk.
• **Premium:** The cost of purchasing the option.

You choose either a "Touch" or "No Touch" option:

• **Touch:** You believe the price *will* touch the barrier before expiration.
• **No Touch:** You believe the price *will not* touch the barrier before expiration.

If the price touches the barrier at any point before expiration, the "Touch" option wins, and you receive the payout. If the price doesn't touch the barrier, the "Touch" option loses, and you lose your initial investment. Conversely, the "No Touch" option wins if the barrier isn't touched, and loses if it is.

Key Considerations and Analysis

Successful implementation of the One Touch strategy relies on several key considerations:

• **Volatility:** High volatility is crucial. The wider the price swings, the greater the chance of the barrier being touched. Understanding Volatility and its impact is paramount. Tools like the Average True Range (ATR) indicator can help assess volatility.
• **Time to Expiration:** Shorter expiration times require quicker, more dramatic price movements. Longer expiration times give the price more time to reach the barrier, but also increase the risk of the price reversing direction.
• **Barrier Placement:** Brokers strategically place the barrier. It’s not random. The barrier is typically set at a distance from the current price that makes the option attractive to traders, but also provides the broker with a margin of profit. Analyze the distance of the barrier relative to the current price and potential support/resistance levels.
• **Support and Resistance Levels:** Identifying key Support and Resistance levels is vital. If the barrier is placed near a significant resistance level, a "Touch" option might be riskier, as the price may struggle to break through. Conversely, if the barrier is near a support level, a "No Touch" option might be less likely to succeed.
• **Trend Analysis:** While not strictly directional, understanding the underlying Trend can be helpful. A strong uptrend might favor a "Touch" option with an upper barrier, while a strong downtrend might favor a "Touch" option with a lower barrier. Utilize Moving Averages and Trend Lines for trend identification.
• **Economic Calendar:** Major economic events and news releases can cause significant price fluctuations. Trading around these events can be profitable, but also extremely risky. Be aware of upcoming economic releases and their potential impact on the asset you're trading. Refer to a reliable Economic Calendar.
• **Technical Indicators:** Supplement your analysis with technical indicators. Bollinger Bands can help identify volatility and potential breakout points. Relative Strength Index (RSI) can indicate overbought or oversold conditions. MACD can help identify trend changes. Fibonacci Retracements can highlight potential support and resistance.

Strategies Within the One Touch Strategy

While the core principle remains the same, variations exist within the One Touch strategy:

• **Volatility Breakout Strategy:** This involves identifying periods of low volatility followed by an expected breakout. When volatility is expected to increase, a "Touch" option is placed, anticipating the price will move significantly.
• **News Event Strategy:** Capitalizing on the volatility surrounding major news releases. A "Touch" option is opened shortly before the news release, anticipating a large price swing. This is high-risk, high-reward.
• **Range Breakout Strategy:** Identifying assets trading in a defined range. A "Touch" option is placed on either the upper or lower boundary of the range, anticipating a breakout.
• **Combined with Price Action:** Using candlestick patterns like Doji, Engulfing Patterns, or Hammer to confirm potential breakouts and increase the probability of a successful trade.

Advantages of the One Touch Strategy

• **High Payouts:** One Touch options generally offer higher payouts compared to traditional binary options.
• **Relatively Simple:** The concept is easy to grasp, making it accessible to beginners.
• **Flexibility:** You can trade both "Touch" and "No Touch" options, allowing you to profit from both upward and downward price movements.
• **Short-Term Trading:** Suitable for short-term trading, allowing for quick profits.

Disadvantages of the One Touch Strategy

• **High Risk:** The probability of success is often lower than with standard binary options, as the price needs to touch a specific barrier.
• **Barrier Placement:** The broker controls the barrier placement, which can be unfavorable to traders.
• **Volatility Dependence:** Requires significant volatility to be profitable. In low-volatility environments, the strategy is unlikely to succeed.
• **Emotional Trading:** The high-risk nature can lead to emotional trading decisions.
• **Broker Manipulation:** While rare, some unscrupulous brokers might manipulate prices to avoid the barrier being touched. Choose a reputable and regulated broker. Broker Regulation is important.

Risk Management for One Touch Trading

Effective risk management is crucial when using the One Touch strategy:

• **Small Investment:** Only invest a small percentage of your trading capital per trade (1-5%).
• **Stop-Loss:** While binary options don’t have traditional stop-losses, you can limit your exposure by trading a smaller amount per option. Consider this your equivalent of a stop-loss.
• **Diversification:** Don't put all your eggs in one basket. Diversify your trades across different assets.
• **Avoid Overtrading:** Don't trade every signal. Be selective and wait for high-probability setups.
• **Understand the Risks:** Fully understand the risks involved before entering a trade.
• **Demo Account:** Practice with a demo account before trading with real money. Demo Accounts are vital for learning.
• **Position Sizing:** Calculate your position size based on your risk tolerance and account balance.
• **Keep a Trading Journal:** Record your trades, including your reasoning, results, and lessons learned. Trading Journal is a powerful learning tool.
• **Emotional Control:** Avoid impulsive decisions driven by fear or greed. Trading Psychology is a critical component of success.

One Touch vs. Other Binary Options Strategies

| Strategy | Directional? | Volatility Dependent? | Payout | Risk | Complexity | |--------------------|--------------|-----------------------|---------|----------|------------| | High/Low | Yes | Moderate | Moderate| Moderate | Low | | Touch/No Touch | No | High | High | High | Moderate | | Range | No | Moderate | Moderate| Moderate | Low | | Trend Following | Yes | Moderate | Moderate| Moderate | Moderate | | Straddle/Strangle | No | High | High | High | High |

Related Concepts and Further Learning

• Binary Options Basics
• Technical Analysis
• Fundamental Analysis
• Risk Management
• Trading Psychology
• Options Trading - understanding the underlying principles of options.
• Market Sentiment - gauging the overall attitude of investors.
• Chart Patterns - identifying formations on price charts.
• Candlestick Patterns - interpreting single or multiple candlesticks.
• Gap Analysis - understanding price gaps and their implications.
• Support and Resistance – Identifying key price levels.
• Moving Averages – Smoothing price data to identify trends.
• Bollinger Bands – Measuring volatility and identifying potential breakouts.
• Relative Strength Index (RSI) – Identifying overbought and oversold conditions.
• MACD – Identifying trend changes and momentum.
• Fibonacci Retracements – Identifying potential support and resistance levels.
• Average True Range (ATR) – Measuring volatility.
• Economic Calendar – Tracking upcoming economic events.
• Broker Regulation - Ensuring your broker is reputable and regulated.
• Trading Journal – Recording and analyzing your trades.
• Position Sizing - Determining appropriate trade sizes.
• Demo Accounts – Practicing trading without risking real money.

Start Trading Now

Sign up at IQ Option (Minimum deposit $10) Open an account at Pocket Option (Minimum deposit $5)

Join Our Community

Subscribe to our Telegram channel @strategybin to receive: ✓ Daily trading signals ✓ Exclusive strategy analysis ✓ Market trend alerts ✓ Educational materials for beginners