At the time when Binary Options appeared as a trading instrument, there was only one type of binary options or the “Up/Down” option, the profit from which the trader received in case of a successful forecast of the price direction.

Now there are a lot of different types of options that you will have to deal with in trading. I think it will not be bad if you learn in advance about them and the principles of their work - for many of us they open up complete freedom of action.

Binary option Up/Down or Call/Put

The simplest and most popular type of binary options is the Up/Down option, which is also a classic option. It is on it that you will have to trade most of your time.

To open a deal, there are only two buttons: Up and Down, which determine the direction of the forecast. The essence of the Up / Down option is to determine where the price will be at the time of expiration (closing the transaction) in relation to the current price - higher or lower than it by at least 1 point.

If the trader believes that the price will, for example, grow, then he selects the desired expiration time and clicks on opening a deal up. The deal is opened at the current price. At the time of expiration, the transaction is closed and the calculation of the results begins:

• If the price, at the time of closing the transaction, is really higher than that which was at the opening of the transaction, then the trader receives a fixed payment, known even before the opening of the transaction
• If the price, at the time of expiration, is less than the opening price of the transaction, then the trader loses the entire amount invested in the transaction

Using binary option "Up/Down" in trading

Binary option "Up/Down" can be used everywhere: during trend price movements or even in a flat. Only one thing is important for a trader, so that the price, at the time of expiration, moves towards the perfect forecast by at least 1 point.

If the transaction is closed at the opening price, then, as a rule, the transaction amount is returned to the trader's trading balance. But this rule does not work for all binary options brokers, so it is better to check the trading conditions with your broker.

The Up/Down binary option itself allows you to use any expiration time: from a few seconds to several months. The longer the expiration time used in the trade, the further the price can go from the opening point - the trade is less risky (if the forecast is correct).

For example, we can give a Down trade on an Up/Down option, which was made along the trend:

• The Up trade will be closed in the money if the price, at the time of closing the trade, is higher than the opening price of the trade
• The Down trade will be closed in the money if the price, at the time of closing the trade, is lower than the opening price of the trade

High/Low binary option

The Binary High/Low option is a more complex but more profitable version of the Up/Down option.

The trader still needs to determine in which direction the price will move, but, in addition to this, this option has a limit, above (or below) which the price at the close must be in order for the trade to make a profit.

In fact, the operation of this option can be described in the following way:

• The trader makes a forecast for the direction of the price, for example, Up and opens a deal “Higher”
• The deal is opened at the current price, but initially at a loss - the level after which the price will be in the profitable zone is higher and is known before the deal is opened
• If the price, at the time of closing the transaction, is above the level set by the option, then the transaction is closed in profit and the trader receives a profit known before the opening of the transaction
• If the price, at the time of closing the transaction, is below the level set by the option, then the transaction closes at a loss and the trader loses the amount invested in this transaction

Such options are more difficult to calculate - because of this, they have an increased return (more than on ordinary Up / Down options).

Using a High/Low binary option in trading

Binary option "Higher / Lower" is used only in trend price movements - in a flat (sideways price movement - movement when the price is approximately at the same price level), this option will not work.

A great time to trade this type of options is the release of important economic news. At this time, the price “shoots” very strongly in one direction or another, which will allow us to consistently close deals on the “Higher / Lower” option in profit.

For an illustrative example, you can analyze the deal “Higher” during the release of economic news:

Unlike regular Up/Down options, the High/Low option is designed for a longer expiration time and is not suitable for short-term trading - it is best to use an expiration time of 30-45 minutes or more so that the price has time to “break through” the desired level.

One Touch Binary Option

A One Touch binary option is an option in which a trade is closed in profit if the price reaches a certain price level before the expiration time. Moreover, just one touch is enough for the deal on this option to close in positive territory.

The binary option "One touch" works as follows:

• The trader determines the further direction of the price, for example, Down and opens a deal
• A level appears under the price, known even before the opening of the transaction, which the price must touch in a certain time - before the completion of the transaction
• If the price, before the expiration time, touches the desired price level, then the transaction is closed ahead of schedule and the trader receives his profit, known even before the opening of the transaction
• If the price does not touch the level before the end of the trade in time, then the option is considered unprofitable and the trader loses the entire amount of the investment

Trading conditions on this option are equally profitable for both the trader and the broker. There are a lot of trading strategies for this type of options, which indicates its popularity among traders.

Using One Touch binary option in trading

As you already understood, this option will only make a profit during trend impulses or trend price movements. Such impulses occur on pullbacks or breakouts of strong support and resistance levels.

The only time you should not use the One Touch option is during a sideways price movement. The price simply will not be able to touch the desired level.

It is also desirable that the trader be able to analyze price charts and find strong support and resistance levels - the price may simply not break through them and the option will close at a loss.

For an example of using this option, we will analyze the following example:

This type of option is also traded with an expiration time of 15 minutes. The longer the expiration time, the further the price level is set to which you need to get.

Binary option No Touch

No Touch binary option is the complete opposite of One Touch option. The purpose of this option is to make a forecast in which the price will NOT touch a certain price level.

The principle of operation of the binary option "No Touch":

• The trader determines the further direction of the price so that the price does NOT touch the option level, for example, Up and opens a deal
• A level appears under the price, known even before the opening of the transaction, which should not be touched by the price for a certain time - before the completion of the transaction
• If the price, before the expiration time, touches the desired price level, then the transaction is closed ahead of schedule and the trader loses the investment amount
• If the price does not touch the level before the end of the transaction in time, then the option is considered profitable and the trader receives a fixed amount known even before the opening of the transaction

Use of binary option "No Touch" in trading

The “No Touch” option is used both during sideways price movements and during trend movements. The essence of the option is to determine exactly where the price will NOT go, i.e. make a reverse prediction.

During trend movements, you need to determine the moment when there will be no sharp and strong rollbacks, open a deal in the direction of the trend in such a way that the price level of the No Touch option is in the opposite direction - not on the path of the trend.

When trading during a sideways price movement, everything is a little more complicated: you need to determine the boundaries of the price channel, in which the price is in the sideways movement, and then wait for such conditions that the option level is OUTSIDE this channel - so that the price has a minimum chance of touching this level, remaining in your price channel.

For example, let's analyze a trade during a sideways price movement:

Any expiration time is suitable for the No Touch option. In this case, time can be both for us (if the price moves further and further from the option level) and against us (we have to make forecasts more accurately and predict the strength of the price movement). In general, the faster the option closes, the less likely the price will touch the level and close the trade at a loss.

Binary option Boundary, Channel, Range

Binary option "Border" or "Range" - an option that allows the trader to earn if the price, at the time of closing the transaction, is in a certain range - between two borders.

The principle of operation of the binary option "Border", "Channel" or "Range":

• The trader makes a forecast that in the near future the price will move sideways - there will be no trend price movements
• The "Border" or "Range" option sets the borders of the price channel above and below the current price (the borders are known even before the opening of the transaction)
• If the price, at the time of closing the transaction, is inside the price channel, then the trader receives a profit that is known even before the opening of the transaction
• If the price, at the time of closing the transaction, is outside the price channel of the option, then the transaction closes at a loss and the trader loses the amount invested in this transaction

There is one very important point: the price, during an open transaction, can leave the boundaries of the price channel - there is nothing to worry about, the transaction is closed only at the set expiration time, and only the price value at the closing of the transaction is important.

Application of the binary option "Border", "Channel" or "Range" in trading

As you might guess, the "Border" or "Range" option is used only in calm price movements - a sideways movement or a sluggish trend. During the release of economic news, the use of this type of option is meaningless.

The trader's task is to find the moment when the price will move in a flat and determine the boundaries of the current price channel, and then compare the data with the price channel of the "Border" option. If the conditions suit you, then you can open a deal.

In the "Range" option, the expiration time directly affects the width of the price channel - the longer the expiration time, the narrower the channel will be and vice versa.

Binary option "Out of bound" or "Out of range"

Binary option "Out of bounds" or "Out of range" - an option that allows you to earn on the forecast when the price, at the time of closing the transaction, will be outside the price channel set by the option. Simply put, this is the complete opposite of the "Border" option.

The principle of operation of the binary option "Out of Boundary" or "Out of Range":

• The trader makes a forecast that in the near future the price will move in a trend movement - there will be no lateral price movements and consolidation
• Option "Out of bound" or "Out of range" sets the boundaries of the price channel above and below the current price (the limits are known even before the opening of the transaction)
• If the price, at the time of closing the transaction, is inside the price channel, then the transaction closes at a loss and the trader loses the amount invested in this transaction
• If the price, at the time of closing the transaction, is outside the price channel of the option, then the trader receives a profit that is known even before the opening of the transaction

As with the “Border” option, only the position of the price at the time of closing the transaction is important - while the transaction is open, the price can break through the borders of the price channel several times, there is nothing to worry about.

Using Binary Option "Out of Boundary" or "Out of Range"

Binary option "Out of bounds" or "Out of range" is used during trending price movements and during the release of important economic news.

The trader's task is to determine the moment when the price will move in a trend or the moment when the sideways movement ends with a further transition to a trend. In lateral price movements, this type of option will not work.

The longer the expiration time chosen by the trader himself, the wider the price channel will be.

Turbo binary option or tick option

A binary option "Turbo" or a tick option is a short-term option that works on the smallest price changes.

The principle of its operation is exactly the same as that of the Up/Down option:

• The trader makes a forecast for the direction of the price, for example, Up and opens a deal “Higher”
• The deal is opened at the current price and the tick count starts
• If the price, at the time of closing the transaction, is higher than the opening price of the transaction, then the transaction is closed in profit and the trader receives a profit known before the opening of the transaction
• If the price, at the time of closing the transaction, is below the opening price, then the transaction closes at a loss and the trader loses the amount invested in this transaction

The only difference is that this type of option does not use the expiration time, and transactions are opened for a certain number of ticks - the minimum price changes. Thus, by opening a deal for 5 ticks, you can wait a minute (with very slow price changes) or, conversely, get the result instantly (with a very sharp price change).

The very type of options is very risky and is not suitable for all traders.

Using a binary option "Turbo" or a tick option in trading

This option can be used in any market: during trend movements, during a flat, and even during the release of important economic news.

The problem is that trading tick options is more like a game or a lottery than trading. It is very difficult for a trader, even with a very long trading experience, to predict price movements in such a fast period of time.

Binary option Spread

Binary option "Spread", like the option "Higher/Lower", is built on the principle of determining the direction of price movement. But it is important not only to determine the direction, but also the strength of the movement itself - so that the price, for example, at the time of expiration is 20 points higher from the option purchase point.

The principle of operation and tips for using the Spread option will be exactly the same as for the High / Low option, so I will not repeat myself - you can see everything you need at the beginning of this article.

Binary option "Ladder" or Ladder

Binary option "Ladder" or Ladder is a highly profitable, but at the same time difficult option to trade. Profit on this option can reach 1000-2000% percent, but where there is high profit, there are high risks.

The principle of operation of the binary option Ladder:

• The trader chooses one of the levels of the Ladder option - the farther the level is from the current price, the greater the potential profit
• Price must reach (touch) this level before closing the trade
• If the price touches the selected level of the Ladder option before the closing time of the transaction, then the trader receives a fixed profit, known even before the opening of the transaction
• If the price has not touched the level of the Ladder option and the trade is closed on time, then the trader loses the investment amount

The option itself works in exactly the same way as the One Touch option, but has a significantly higher profitability.

Using binary option Ladder in trading

The Ladder option can bring a trader a very good profit in just one correct trade, because. the yield for a correct forecast can reach 2000% (the investment amount is multiplied by 20). In turn, binary options brokers do not intend to just distribute money to everyone.

The Ladder option, as a rule, does not give out the most favorable conditions for the trader. In most cases, traders have to trade against the existing trend or, if the price is in a sideways movement, the option levels are well beyond the horizontal price channel.

The trader is required to soberly assess the possible price movement, determine its strength and select the desired option level. The Ladder option itself can be used during the release of important economic news, when the price is moving rapidly in one direction.

Pairs binary option

A paired binary option or "Pairs" option is an option that compares two prices of different assets (usually stocks or indices). Thus, a pair is obtained, for example, from Apple / Google assets.

The option works in exactly the same way as a regular Up/Down option, only making predictions on it is not very convenient and not familiar. For stable trading, you need to understand the economic news of traded assets.

For example, Apple announced the release of new products - the share price of the apple company began to rise. If Google doesn't have some big news, then, relative to Apple's price, the price will drop.

Options CFD or Contract For Difference

CFD options or Contract For Difference is one of the varieties of options that brokers have come up with by combining Binary Options and Forex.

CFD contracts are a type of trading instrument that enters into a contract between a trader and a broker to transfer the price difference between the opening and closing levels to the party that won the contract (who made the correct forecast).

Now it's easier. The principle of operation of CFD contracts is as follows:

• A trader opens a trade by setting all the necessary settings and choosing its direction (up or down)
• If the price moves in the direction of the trader's forecast, then for each point passed, the trader receives a fixed amount depending on the leverage
• If the price goes against the trader's forecast, then the trader gradually loses the investment amount at the same rate as he received it - the further the price has gone from the entry point, the greater the loss.
• A trader can close a trade at any time and take profit or loss

The Stop Loss is the investment in a trade – the maximum amount that a trader can lose in a particular trade. Take-Profit is also set, which limits the trader's profit.

Application of binary option CFD or Contract For Difference in trading

CFD or Contract For Difference is very beneficial during trending price movements. Thanks to the settings of contracts and the correct forecast, you can quickly earn an impressive amount of money. On the other hand, with the wrong approach, this amount of money can be lost just as quickly.

As a rule, traders expose their CFD contracts in such a way that the potential possible profit is 4-5 times greater than the possible losses. To achieve such results, it is necessary that the price moves in a trend for a long time.

Such conditions appear during the release of important economic news. But even without news, there are a lot of entry points - a trader needs knowledge of the technical analysis of charts and the ability to determine the presence and strength of trends.

Digital binary option

Binary option "Digital" is another very profitable trading tool that allows you to earn an impressive amount in a short time.

The Digital option works like this:

• The trader selects one of the levels, above or below, which the price should be at the moment of closing the transaction, and chooses the direction of the transaction
• The further the level is from the current price, the more profit a trader can make
• If the forecast came true - the price, at the time of closing the transaction, is behind the selected level, then the trader receives a profit known even before the opening of the transaction
• If the forecast was not justified - the price, at the time of closing the transaction, is on the other side of the selected level, then the trader loses the amount invested in this transaction

You can exit the transaction at any time and take profit - it changes dynamically throughout the transaction.

Forex or Forex option on Binary Options

Forex option is Forex contract trading stylized as Binary Options.

As in CFD contracts, on Forex options, the trader chooses a stop loss (the amount of investment in the transaction) and take profit (the expected profit, upon reaching which, the contract will be closed).

Forex option works as follows:

• The trader opens a trade in one of the directions (up or down)
• If the price moves in the direction of the forecast, then the trader gradually makes a profit for each point in the right direction
• If the price moves against the trader's forecast, then the latter incurs losses with each pip
• The trade is closed when one of the limits is reached - the loss limit (Stop Loss) or the profit limit (Take Profit). Also, the trader can close the deal ahead of schedule and fix the profit.

The option does not work on time - there is no expiration time, as such. The further the price has gone from the point of opening the transaction, the greater the profit or loss of the trader, but everything is limited by the amount of investment in the transaction and the pre-set Take Profit.

Forex options are used by traders in the same way as CFD contracts.

Which option to choose for trading: which is better?

As you can already understand, there are a lot of types and types of options in BO, and they all have their own advantages and disadvantages. And their profitability for a correct forecast is very different. So what should you choose for your trading? Very rarely (almost never) High Yield Binary Options are low risk. On the contrary, the higher the yield, the greater the risks. An exception, perhaps, are CFD contracts, but they are not suitable for everyone, because. many times more difficult than conventional options.

The choice of a trading instrument is always yours - you can try at least everything. But will this be of any use? For the "exotic" types of Binary Options, there are not many strategies and trading methods, but for the usual options "Up / Down" there are more than enough of them.

For novice traders, first of all, I recommend focusing on classic options - they are quite simple and allow not only to understand the essence and principles of trading on Binary Options, but also not to be distracted from the gradual study and improvement of skills. Well, experienced traders will not ask my advice - even without me they know how and what to trade in order to get a stable plus.

And finally: free cheese is only in a mousetrap! Do not be greedy - you still can’t earn all the money, and your profit will not run away from you anywhere!