Boundary options trading is also known as In/Out trade. In this method, the trader has to predict whether the price of an asset will be on the higher or lower side of the proposed boundary, i.e., price.
In short, traders gain profit or lose the invested amount based on the limited price motion. Generally, the lower and upper value of an asset is determined by the broker.
How are Boundary Options different from other trading methods?
While in other trading methods, traders have to predict if the price of an asset will be higher or lower than a given value, boundary options are different.
Here, traders have to analyze whether the price of an asset will be In/Out of the predetermined price value.
Also, boundary options trading does not have a short expiry time, say 60 seconds. Again, it’s because short expiry times can be risky.
Example of how Boundary Options working
To understand boundary instruments, i.e., In/Out trade option, here’s a quick example.
Let’s say you are trading on currency pair USD/EUR. At the given time, its value is $5. Its bottom value is $4, and its upper value is $6. Now, if the value of USD/EUR stays within the range and you have trade In, this means you have made a successful prediction.
Every trading instrument is different, and each of them has pros and cons. This means to utilize any given instrument to its fullest; you need to understand it inside out.
Along with selecting the right trading instrument, it’s also essential to choose an accurate expiry time to make a considerable profit.
See other important articles in my glossary.
(Risk warning: You capital can be at risk)