Even if you are a complete beginner in the world of binary trading, you have heard of Call/Put options, which belong to the traditional and the most common type. However, the popularity of binary trading is on the rise, and together with it come the innovations in this trading type.
One of the relatively new concepts in binary trading is boundary options, also known as tunnel or range options. They are similar to traditional Call/Put concept to some extent, but they have some different requirements.
What are boundary options?
Boundary options are among newcomers in binary trading. This is why they are still not on the platforms of all brokers, but you can trade them on10 Best Binary Robots and th other veterans of binary trading.
With these options, you are required to choose the asset first. Then, you need to determine the price range within which you expect it to move, which you can imagine as a sort of a “tunnel”. After this, you need to choose the amount of money to invest and choose one of the two options – will the asset’s price stay inside or outside the predetermined price range or “the tunnel” within a certain period of time. If you chose “inside” and the price does not go below the lowest or above the highest price, you win the trade.
Advantages and disadvantages of boundary options
One of the biggest disadvantages of boundary options is that you do not have one value to reach (or not reach), but there are two of them for each asset you trade. This means that the risk is much higher with this type of binary trading. However, due to the higher risk, payout is much higher with this type of binary options. This means that, if you take this risk, you can have very high return and earn a lot of money.
Another disadvantage is that it requires more complex analysis than other types of options, precisely because there are two target prices and not only one. However, if you are skillful with technical analysis and know how to observe the changes in the market, this should pose no problem for you.
Who can trade boundary options?
It is important to note that boundary options are not for everyone. They are not recommended for beginners in the world of binary trading. This is simply because they are still not skillful enough and do not know the principles of market analysis.
They are not only familiar with technical analysis, but they know the typical behaviors of certain assets in the market.This makes them more capable of trading boundary options, because for such traders the risk is much lower than for those who are still new to this.