Touch options strategy for news trading
The Touch Options Strategy for News Trading (TOSNT) can be use only when trading the news, as the name suggests, and requires a broker that allows Touch Options.
If you are not familiar with news trading, you can’t use this strategy. If you know what news trading is and what happens with the markets during the news, this strategy may be your lucky bullet to success. As with all the strategies presented here, we will use an example in order to make it easier for you to follow.
Step 1: You are ready for the release of big news that will shake the markets. The NFP (Non-farm Payrolls) is a good example of such news that affects the US Dollar. 10 minutes before the news is released you take action.
Step 2: You buy a Touch Up Option and a Touch Down Option with the same value, at the same time. Let’s say you are trading on EUR/USD and the price is 1.3500. The Touch Up option will pay you 250% profit if the pair will hit the price of 1.3525 in the next 20 minutes. The Touch Down will pay you 250% profit if the pair hits 1.3475 in the next 20 minutes. That means that if the market will move more than 25 points in the next 20 minutes in any direction, one of your touch options will hit.
Since the NFP shakes the market with at least 50 points every time, one of your options will surely hit. If you are lucky enough and the market moves both ways before deciding which direction it goes you can even hit both targets. If you hit only one of the touch options (this will happen in most of the cases) and you invested $100 in each option, you will get a $350 payout for the winning option and zero for the losing one. That means a net profit of $150.
Hitting both options is pretty uncommon, but if you are lucky enough to be in this situation you will make a profit of $500! If you chose the right news that move the markets well enough you are almost certain to win with this strategy. The key to success with this strategy is to choose the right news and have good timing.