Other Types of Binary Bets
In addition to the standard types of binary bets on offer, the markets have grown to offer a range of special alternatives, which satisfy the demand from traders for more diverse, more flexible trading instruments. The impact of these so-called ‘specials’ is to provide traders with the means to bet on more diverse outcomes, which can add an enhanced degree of flexibility to binary trading, whilst allowing traders the ability to capitalize on a variety of different trading scenarios.
‘One touch’, also known as ‘American binaries’ stipulate a certain price point the market must break at some point over the defined trading period. If the market does break that certain limit and the trader has bought on that basis, he will profit from the transaction, which will settle at 100 as normal. If the market fails to reach that defined point, even if the market does in fact rise on the day, the bet is settled at 0. One touch bets are a great way of factoring in the extent of market movements, particularly in response to third party economic indicators and announcements which might have a dramatic but temporary effect on the day’s trading. An example of a one touch bet might be whether the FTSE 100 will touch 5750 over the course of the trading day.
A so-called ladders binary specifies that the market has to have risen beyond a certain level at some given point over the trading period. For example, a ladders bet could stipulate that the FTSE should rise to beyond 5750 by 3pm for example, with the same binary outcome as in other binary bets – if yes, the market is made up to 100, and if no, the market is made up at 0. This allows traders to factor in both the price rises the market is likely to foresee and a time-sensitive component. This is obviously a less obvious market movement to call, but it nevertheless pays better odds than comparatively more straightforward binaries, so it’s a case of weighing up the numbers to decide whether a particular ladders bet works for you.
Similar to the ‘one touch’ in many respects is the ‘tunnel’ bet. Whereas the one touch bet is good for picking out factors that might cause the markets to peak beyond their opening and closing rates and their normal rates, the tunnel bets are the inverse – that is, the market must stay within set parameters throughout the duration of the bet, be it an hour, a day or a week. The tunnel bet allows traders to capitalize on markets that are perhaps less volatile than others, whilst enabling a binary position on markets that stay within their predefined limits.
Hi Lo bets work on the basis of a certain range quoted, from which the days market highs and lows must be in order for a buy bet to be settled favourably. For example, a hi lo binary might stipulate that the day’s market high should be more than 20 points beyond the previous day’s high. Again, this is a harder binary bet to call, but it nonetheless pays better odds for a successful trade.
Short Term Bets
Amongst some of the more popular specials on offer through binary brokers of all shapes and sizes are short-term bets. By short term, don’t think weeks. Don’t think days. Don’t even think hours – short term binary bets play out over the course of minutes, which makes for an ultra-volatile market dynamic and one of the fastest, most energetic forms of binaries trading.
This can be a particularly lucrative and also particularly risky market to get involved in, with potentially thousands gained and lost in the space of just a few minutes. Nevertheless, it allows traders to jump on board ahead of time sensitive conditions, such as particular economic announcements, to ride the wave of especially short-term price movements. Naturally, the odds for this can be particularly rewarding, although it can be impossible to call the direction that the markets might move in such a short space of time.