High/Low trading instrument, also known as Up/Down instrument, is one of the simplest ways of binary trading. And it is offered by almost all the brokers.
High/Low options work on a simple theory of predicting the price of an asset. As a trader, you need to analyze the market and understand whether the value of a given asset will increase or decrease from its current market value. In short, whether it will go high or low.
What are Call and Put Options in High/Low?
After analyzing the previous price fluctuations and market trends, you can opt for a call option if you think that the value will increase.
On the flip side, if you predict that the value of an asset will fall beyond its spot price, you can opt for a put option.
If you have correctly predicted the price and opted for a call or put option accordingly, you will generate profit.
Example of High/Low Instrument
Here’s a quick example of how the High/Low option works.
Let’s say you are investing in oil. Its current price is $20 with an expiry time of 30 minutes. Now, if you think that the price of oil will decrease before the expiry time, you pick “low” and opt for a put option.
If it does, you will make a profit. Otherwise, you will lose your investment.
High/Low is one of the few binary options instruments you can choose to trade successfully in the market. But you should pick an option only after analyzing everything.