With high/low binary options, you simply predict whether the price of an asset will be higher or lower at a certain time in the future. If you are correct, you will win your bet. If you are incorrect, you will lose your bet.

Among all trading type variants in binary options brokers, high/low, touch, and boundary options are the most common, as almost all offer those trading types in their platforms. But, not all brokers provide the same conditions for each trading type. You will find that different brokers give different terms for every trading type.

The different conditions for high/low options are mainly related to price target ion. This trading type is the binary options trading itself. Traders must predict whether the price will go higher or lower for a certain period. By choosing high option, trader expects that the price will move higher, while setting a low option indicates that the price is expected to go lower from the current level.

Ordinary call/put options in a trading platform is similar to high/low trading type. Interestingly, brokers tend to modify it with their setups. It can be seen as an improvement since analyzing only the price direction will bore you sooner or later.

 

Two Types of High/Low Trading

From some types of high/low options you may come across, these two are the most common in binary options brokers:

 

1. High/Low with Price Target Set by Trader

Here, traders can choose their strike price to begin their options. Setting the strike price is similar to placing a pending order in spot forex trading. With this high/low trading, you can hold your options until the strike price is reached. Your option will be automatically opened when your strike price is touched and closed when your option expires.

 

2. High/Low with Price Target Set by Broker

Some brokers determine a target price and invite traders to generate high-return payouts by placing an option based on that target level. Simply put, it's a challenge for traders to try analyzing price positions from a certain price target before the time expires.

In most cases, this kind of option is set for being hard to predict and is only available at some particular times. Even though you can predict price movement in two directions, high and low, market volatility will give you a hard time.

 

How To Place Each Different Type of High/Low Options

Each type of high-low option needs to be treated differently. It doesn't only serve as a broker's extra feature and turns into the thing that sets your trading strategy. To make it easier, here are some examples of placing options using the two high/low types.

 

1. High/Low with Price Target Set by Trader

Only a few brokers offer high/low options with price target set by trader. Binary.com is a rare broker that puts these high/low options alongside its standard high/low counterpart. The basic high/low trading (the one with the actual price target) is named as the rise/fall option in this broker.

While higher/lower is the name for high/low options with price target arranged by trader. This high/low type allows you to set a barrier offset to suspend your options until that level is touched. Thus, you are given unlimited time to determine a certain price level that you believe to be the start of a significant price movement.

high/lowHigh/low platform trading with a price target set by trader in Binary.com

If you trade in Binary.com, you only need to fill out the barrier offset form before purchasing a higher or lower price. A price chart and spot price are in the trading platform for you to analyze before placing an option. By completing your analysis tools, those features support higher/lower trading in the best possible way.

 

2. High/low with Price Target Set by Broker

Brokers that arrange specific price target usually provide extremely high return rates. This kind of trade is only available in volatile market, making it hard to predict where will the price end up. Hence, this high/low options type is only suitable for professional traders with a lot of experience for trading in volatile market.

Above/BelowHigh/low platform trading with price target set by broker

You can see that in above/below options, the broker set the price target in 1.61357. Seeing that the spot price is in 1.61246, it's clear that the target is higher than the current price.

A below option predicts that the price will not reach the target level, while an above option expects the price to shoot up from the current level. There's a 220% profit rate available if the price is in the expected position when the time expires.

 

High/Low Options Pros and Cons

While entitled as the most basic trading type in binary options, you still need to pay attention to certain things when choosing high/low options, especially since many brokers now offer some high/low variations to attract more traders. Yet, some advantages are also when you trade with high/low options.

Pros:

  • Trading becomes easier, as you don't need to bother about stop orders. There are only option types (high/low, rise/fall, above/below), expiry times, and strike prices that you need to worry about. Nonetheless, if your ongoing option doesn't end up in the money, you can use a rollover or early closure feature.

  • It's applicable for any market condition. Whether it's trending or ranging, you can place your option with high/low, as the price will only need to move higher or lower than the current price. Even if it's only slightly, you can generate profit if the price is heading in the right direction before the time expires.

  • Provides a chance to earn extraordinary results. In high/low variants similar to above/below options, as pictured previously, the average profit rate can go as high as 200%.


Cons:

  • When trading high/low binary options, it is important to understand the terms and conditions of your broker. Some brokers may consider a trade a loss if the asset's price ends at the strike price, while others may return your capital. It is essential to understand these terms and conditions before you trade so that you know what to expect.

  • Although high/low options like above/below can generate high-profit rates, they will also increase your trading risk. Aside from being opened only in volatile markets, brokers usually set the target in unbelievably higher or lower range from the current price. Some traders underestimate this point as they think this condition constitutes the possible high payouts.

 

Conclusion

Using what your broker offers you is a key that will enable you to increase your trading performance. High/Low options is practically provided by all binary options brokers available out there.

It's okay for you to choose a broker with different kinds of high/low options and try to trade using those trading types, as long as you remember these things; understand the trading conditions, follow your trading plan, manage your risk, and utilize the demo account if provided.