Placing a trade
How do you place a simple high/low trade? Here, we present a short video, which shows how to trade a normal High/Low binary option.
What is a High/Low option? The High/Low option can also be referred to as the Above/Below or Up/Down option. It is a simple choice of whether the current asset value will be higher, or lower, at the point the options expires.
The High/Low is the simplest binary option, and the one used most often. There are however, subtle differences in broker trading platforms, and we will point some of those out here too.
Here is a step by Step guide to opening a High/Low trade:
- Identify an asset to trade
- Select a trade size, and an expiry time
- Pick the direction the price will move
Placing a trade is no more complex than that. These steps remain the same regardless of the trading platform.
The video will run through a trade, and show four platforms;
- Ayrex – Ayrex operate Call and Put buttons, but highlight on the price chart, which direction the asset price will need to move in order for the trade to win.
- Binary.com – Often the choice of advanced traders, the Binary.com platform is the most unique among it’s peers. The video highlights the differences.
- 24Option – A TechFinancials platform, 24 Option is a large brand. The trading platform is very clear, but again, the video will highlight how High/Low trades are made.
- StockPair – This platform has a different look and feel, but the standard buttons remain, and the layout is familiar.
High / Low expiry times
The video shows a “1 minute” expiry, but High/Low trades can range from under a minute, up to a year. Some brokers will also allow trader to choose their own specific expiry time. The process works in exactly the same way, regardless of the trade size, or the expiry.
How to profit from High / Low trades
Binary options do demand a clear strategy. So traders will want to have a strike price in mind (the opening price) where they want to enter a trade, and then a clear idea of where the price will go, and over what time frame.
Given the above, some traders will advocate trading news events. This strategy will require certain features of your broker however – for example, you will want flexible expiry times. Ideally, traders will be able to choose their own. This is really the only way to have confidence trading of news events of announcements. Without this flexibility, you may see an asset price move in the direction you expected, only for it to move back before the expiry because you were not able to have the trade end exactly when you needed.
Another method is to develop a strategy based on technical analysis. Here, a trader might decide that the current price trend will hold, or that certain support or resistance levels will cause a drop or rise in price. These types of strategy have a better long term chance of success (See our section on charts for more information).
Technical analysis is generally what drives signals too. These are trading advice alerts, often sold by providers. Before traders new to binary options start using signals, it is normally better to get a good understanding of trading on their own. This ensures signal services can be judged properly – but hopefully a trader will gain enough confidence to take responsibility for their own trading.
Example High/Low trade
You expect the Oil price to rise, and select ‘High’. The current price is $50.08 a barrel, and your broker pays 90% for winning trades. You select a trade size of £20.
- At expiry, the price of oil is $50.30. You win. Your return is £38 (Your £20, plus 90%)
- At expiry, the price of oil is $49.84. You lose, the entire £20 is lost.
Where can I try High / Low trading?
All of the brokers on our comparison table offer High / Low trades. The best starting point however, might be a demo account. Here, traders can learn the ropes without risking any real money. Some demo accounts are time restricted. Others, such as IQ Option, allow traders to to move freely between demo and ‘real’ accounts. This is very helpful for those who might look to develop a new strategy. Any new system can be trialled on the demo account, and perfected, before switching back to real money.