Binary options tool is not only new and interesting, but also multifarious. Currently, there are about 8-10 binary options’ types. In this article, you will find out the varieties of binary options, as well as the background of their occurrence.
Classical binary option
It is the most popular type of binary option. Generally, everything has started from this type. All other types are only derivatives from the classical option, which offers investments for increase or reduction of the underlying asset. There are many names for this binary option, but the only one principle is basic for all of them. Different brokers give the classical binary option different names, including above/below, digital option, exotic option, and so on. There are no clear reasons for such diversity of names. Probably, this is because the market is young and the professional terms have not established yet.
Why did other options appear?
Giving the unambiguous answer to this question is difficult too. Firstly, the competition plays a critical part. Brokers compete with each other for traders and try to invent new types of binary options. The competition of the same sort exists between the developers of the software for the brokers’ platforms. However, these developers compete for brokers and not for traders.
One more reason for occurrence of the additional binary options’ types is diversity among traders. Some of them prefer scalping that is a quick trade in the very short expiration terms. Others choose standard day-trading. The professional traders who use the fundamental analysis in the binary options trading are interested in the long-time forecasts. Apart from the timeframe’s preferences, there is also a difference in the traders’ level of training. The beginners in trading prefer standard tools and minimize risks, and, at the same time, the experienced and confident professionals look for more profitable positions for their stakes.
Current binary options market provides an adequate solution for the variety of the traders’ behavioral preferences. Let’s consider the main and the most popular of them.
Popular types of binary options
- 60 seconds binary option is the short-term binary options’ type with an expiration term of 60 seconds. It is very popular among scalpers and beginners in trading. Apart from the 60 seconds binary option, some brokers also offer binary options of 60 seconds, 3 minutes, and 5 minutes.
- Touch binary option (Touch, One touch) is the most profitable binary options’ type (up to 470%). The essence of this binary option is not only in the forecasting of price movement’s direction, but also in the forecasting of the quantitative measurement of the length of the price’s growth or reduction. Price has to reach (touch) the pre-set level. It is a difficult binary options type that is not recommended for the beginners in trading.
- Range binary option (Range) is another fairly popular among traders tool. The goal of working with this binary options’ type is to forecast the retention of the asset’s chart within or outside the certain price range.
- Builder binary option (Option Builder) is an ideal option for the beginners. This option lets a trader to manage his ratio of profit and losses, coordinating his own risk management at the same time. We strongly recommend this option.
- Early closure binary option (Black Dragon, Sell Option, Option Pro) is a professional type of options. A trader is provided with a possibility to sell his option early back to a broker. The price at which a broker will be ready to buy an option depends straightly upon the propinquity of the option expiration term and the strike price (the buying price).
As you can see, there are many binary options’ types in the market. They are provided for traders of each skill level and specialty. And it is logical because brokers have satisfied the demand with their supply. However, it is necessary to remember that all of these variants are just the derivative of the standard classical option. We do not recommend the beginners in trading to overuse options of different types. Better work with classics.