High / low options are the binary options type that can generate the highest winning percentage. To help you make money with high / low options, here are three of the best strategies for high / low options you can use.
Trading strategies for high / low options
High / low options require you to predict whether the market will rise or fall over a given period of time. How far the market will rise or fall does not matter. You will win your binary option if the market has moved by only one pip in the right direction.
Here are a few strategies you can use to successfully trade high / low options:
Trading the breakout
Trading the breakout is one of the most commonly used strategies with binary options. Breakouts are significant events that occur whenever the market completes a chart pattern, such as a continuation pattern, a reversal pattern, or any significant event in a trend.
Many conventional traders have placed stop orders or limit orders at these points, which all point in the same direction. When the market triggers the price level, it triggers these orders and creates a sudden surge in supply or demand (depending on the direction of the orders). This surge will create a strong movement called the breakout.
You can use the breakout to win a binary option: Before the market the market reaches the critical price level, invest in a high / low option in the direction of the expected breakout. Keep the expiration time short (1 – 2 periods), to make sure your option expires while the breakout is still dominating the market.
With a strategy like this, you should be able to win a high percentage of your trades.
Trading moving average crossovers
Traders that prefer using technical indicators to generate signals can use moving average crossovers to invest in a high / low option. For this strategy, simply use two moving averages: One with a higher number of periods and one with a lower number of periods.
The moving average with the lower number of periods will follow market movements more closely, while the moving average with the higher number of periods will be slower to react. You can use this simple relation to your advantage: When the faster moving average crosses the slower moving average upwards, the market must have turned upwards recently. This is a good opportunity to invest in a high option with a long expiration time (at least five periods, better more than eight).
When the faster moving average crosses the slower moving average downwards, the market must have turned downwards recently. This is a good opportunity to invest in a low option with a long expiration time. Make sure to only use moving average crossovers in a trending environment, as they lose their predictive power during periods of sideways movement.
If you want to eliminate optical trend analysis completely from your trading, think about using the three moving averages crossover technique. You can always use this strategy, even in a sideways movement.
In a trend, swing traders try to benefit from each movement from high to low and vice versa. This type of trading approach is perfect for high / low options. When you recognize a weakening swing, invest in a high / low option in the opposite direction of the swing. Use a medium to long expiration time of around five periods. The movement should have enough time to develop.
To evaluate the strength of a swing, you can use oscillators such as the relative strength index (RSI), support and resistance lines, and trends of trading channels.
While swing trading takes some time to master, it is a great strategy that generates many trading signals. Therefore, it is perfect for any trader trying to make money fast: More signals mean more trades, and more trades mean higher profit.