Deciphering the Concept of High/Low Options

Binary option trading has emerged to be quite a profitable venture. This is why most traders are keen to grab the chance to trade binary options. Now, there are two possibilities that are likely to happen if you trade binary options. Either you get a fixed amount of compensation if the option expires in the money. However, if the option expires out of the money, then you get nothing in this situation. It will not be wrong to say that the outcome or the success of binary options depend on the yes or no proposition.

When you trade binary options, then there are only two possibilities. Either you will end up winning the trade, or you will experience a loss. If you are eager to earn the maximum profit, then you should try out the High/Low option because it has a fairly simple concept.

The way High/Low option works are that you have to buy the call option if you believe that the price will be higher than the strike price at the time of expiry. If you are of the opinion that the price will be lower than the strike price at the time of expiry, then you should place a put option.

How to Trade High/Low Options

When you want to trade the high/low option, then the first thing you need to do is select your asset. You need to figure out the strike price that will be considered as the trading benchmark. Next, you have to select the trade direction and the expiry time to place your trade.

Now, that you have the basic idea about High/Low let us explain it with a practical example. Assume that you chose a currency pair that is EUR/USD and it has a market price of about 1.30208.

As a trader what you need to do the in-depth analysis first. The reason is that most of the brokerage platforms do not offer charting tools so it can be a problem to analyze the chart.

Once you are done with the analysis part, you have to choose your price direction. Let us assume that your investment amount is about $100 and the expected profit is about 80% if the trade ends in the money.

In this situation, if the trade ends in the money, then you will get about $180. If your trade ends out of the money, then you will lose your $100.

Strategies to Win High/Low Trades

The truth is that High/Low options can offer the maximum profit to a binary options trader provided you choose the appropriate trading strategy.

Swing Trading

You can try out swing trading strategy for high/low option. You can easily identify the overall market trend with swing trading. Technical analysis is required to reap the benefits of swing trading.

In swing trader, you primarily focus on trend mentioned in the chart. If there is an uptrend, then you will place a call option. If the overall trend is down, then you will need to opt for the put option.

Trading the Breakout

The entry points are quite important when you trade the High/Low option. If the entry point is wrong, then you can suffer losses. When you trade the breakout, then it becomes easier for you to identify the entry points. When a trendline breaks downs, or a pattern reaches completion, then this is the point you will witness a breakout.

If you think that a bearish breakout will occur, then you have to invest in a low option. If you are of the opinion that a bullish breakout will take place, then you should invest in a high option.

Remember you can only earn a decent amount trading high/low options if you have a clear idea regarding how much you should invest.  You should make your investment decisions by clearly following a pattern. If a company plans to launch a major product on a certain day, then you can bet on the fact that stocks of that particular company will have a higher value that day.

Do not make aggressive decisions when trading high/low option. Spend time exploring the market and this way you will not have to deal with a lot of risks while trading High/low options.