Touch & No Touch options are different to regular binary options trading. Contrary to Touch & No Touch options, customary binary option trading stipulates that a trader must speculate on whether a certain asset’s expiry rate will be higher or lower than the strike price, within a predetermined timeframe.
No Touch options involve speculating on whether an underlying asset won’t reach a predetermined market rate during a predetermined duration. If the trader places No Touch options with any time frame and the trader’s prediction is correct, the options expire In The Money before the intended expiry time.
Touch options comprise of speculating on whether a certain asset will reach a specific market price during the option’s lifetime. If a trader places Touch options within a timeframe and the asset reaches the predicted rate, the trade automatically expires In The Money without having to wait until the full timeframe to be completed.
Let’s look a Touch options case:
A trader places a touch option on EUR/USD with a 5-minute timeframe, speculating that it will reach the 1.3642 rate during the set timeframe. If the market rate reaches that level during the timeframe, the trade expires In The Money. If it does not, the trade is Out Of The Money.
Now an example of No Touch options:
A trader places a no touch option on EUR/USD with a 5-minute timeframe and speculates that the market rate will reach not reach 1.3564 during the option’s life. If it does, the trader loses the investment amount and if it does not, the trader makes profit and the trade is In The Money.