Blog

How to trade high-low binary options

TradingPub Admin | February 4, 2013

Responsive image

There are many different ways to trade binary options, and one version is high/low trading

These options can also be referred to as up/down binary options. Binary Options Online reports that this security is the most-frequently-traded type of binary option, and that trading these financial instruments is a great way to learn more about this particular realm of derivatives. 

The name for this type of binary option explains it all, high/low options give you the chance to bet on whether or not the price of an asset will either rise or fall within a certain period of time. These financial instruments give you the ability to trade a wide range of assets, and it really is as simple as whether or not you expect whatever you are betting on to go up or down. 

Trading high/low binary options 

Binary Options Now reports that that there are some simple steps involved in trading these contracts. You start out by selecting an underlying asset whether it be a stock, stock index or commodity. The second thing you must do is select an expiry time for the contract you want to enter into. This period can range from as short as 5 minutes to as long as a few days. 

The next stage is to figure out whether you want to bet that the asset will be up or down in value when the expiry time is reached. Finally, you have to determine the amount you want to invest and then make your transaction. 

The media outlet reports a wide range of expiry times is offered by most options brokers, and these will allow you to harness a time frame ranging from as short as 5 minutes to a couple of days. 

Trading example 

To provide an example of how one of these trades would work, lets say you believe that gold is undervalued. Your hunch tells you that this commodity will be trading for more in an hour than it is currently, and you decide to invest $100 into a bet that the metal will be more expensive at the end of this period. If you are right, you will generate a return based on your bet. 

Potential for return 

There is substantial variation in the returns generated by making these trades, according to Binary Options Online. The highest returns that can be generated by these transactions are between 70 and 85 percent. 

If you decide to make one of these trades and you are right, your return will be determined by what asset you bet on, the broker you chose and the expiry time, the media outlet reports.  

Making an inaccurate bet will result in you losing between 10 and 15 percent of your investment, depending on what method you used to trade the securities, according to Binary Options Now. 

Draws of these options 

The possible returns you can generate simply by making accurate bets on the price movements of assets serve to pull many investors to this type of binary option, and help to make them popular.

The fact that they allow you to potentially make strong returns with a short time frame also contributes to the popularity of these securities. 

In addition, trading these financial instruments is rather simple and does not require you to do extensive research or obtain a lot of knowledge about the securities. 

While the basic information about these binary options may seem straightforward, there is a good deal more you can learn if you visit TradingPub. By going to their website, you can obtain access to more options trading education, and the ability to interact with some of the top traders and investors in the industry.