What is a Low Option?

low optionA low option is one of the most essential binary option types that every trader should know to become successful. Low options are especially important because they allow you to take advantage of trading environments in which conventional assets would lose you money.

How to trade a low option

With a low option, you predict that an asset’s price will fall over a given period of time.

It does not matter how much the price of the asset falls. Even if the assets trades lower by the smallest possible increment, you will win your option. Also, it is unimportant what the asset does before the option expires. If the assets price falls below the original price in the last second, you still win your option.

If you win your low option, you get a payout of up to 90 percent. If you are wrong, you lose the money you invested. The exact height of your payout depends on the market environment. When a low option involves more risk, you get a higher payout. When the risk is low, the payout is also lower.

This way of trading is so revolutionary because it allows you to profit from falling prices – what experts call going short. When investors in conventional assets lose money, low options are the easiest way to make money.

Of course, professional traders can also invest in certain certificates that allow them to profit from losing prices, but these certificates are complicated to trade and require you to learn all sorts of specific terms and values and do not offer higher returns. With low options, you can at least the same profits with a few mouse clicks – the much better deal.

Expiry times for low options range from a 5 minutes to a few hours. To also offer low options with shorter and longer payouts, brokers have invented 60 seconds options and long term options.

Those option types work exactly as low options, but 60 second options offer expiry times from 30 seconds to 300 seconds, and long term options offer payouts of weeks, months, and sometimes even years.

Most brokers offer low options for four types of assets:

  • Currencies,

  • Commodities,

  • Stocks, and

  • Indices.

Since many of these assets follow long term and short term trends, low options provide you with the perfect opportunity to profit from declining currencies, stocks in crisis, and sinking prices on commodities.

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The opposite of a low option is a high option. High options predict rising prices for an asset. While high / low options are similar in nature, they serve a different purpose. With high options, you can take advantage of positive developments, while low options are ideal to profit from crises.

When to trade a low option

On long time scales, low options are perfect to take advantage of crises and sinking prices. For example, currencies often form long term trends that last for years.

Most popularly, the Euro and the US-Dollar formed a long standing trend where the Euro rose in relation to the Dollar for years. About a year ago, this trend turned around and the Euro has been falling in relation to the Dollar since.

With low options, this trend would have given you numerous options to win a binary option. Use a long expiry, maybe even a long-term expiry, and you should win a high percentage of your trades in similar situations.

To win trades on shorter time scales, you have to use technical analysis. Even if you know that the Euro will fall in relation to the Dollar over the next month, this knowledge does not help you to predict what the EUR/USD will do in the next hour. Technical analysis is the only way to win 20 or 30 trades in one month.

Technical analysis is a wide subject, and there are plenty of different strategies that can help you to find opportunities to win a short option. This article can only present you with a short overview. Research each possibility and choose the one you feel the most comfortable with.

The most popular opportunities to win a low option are:

  • Trading trends: When prices fall, they move in trends. By learning to find these trends, you tap into an endless reservoir of profitable trading opportunities. You can either follow trends as a whole or trade each swing in the trend individually.

  • Trading candlestick patterns: Candlesticks are simple and complex chart formations that allow you to predict what will happen next. By learning to spot candlestick formations that indicate falling prices, you can find trading opportunities for low options whenever you need.

  • Trading technical indicators: Technical indicators aggregate past market data in a way that allows you to make predictions about future price movements. By finding the right technical indicator for you, you can create trading signals for low options in any market environment.

Of course, this is only short overview. Dive deeper into our site, and you will soon understand the entire bandwidth of possibilities technical analysis has to offer.

What is a Low Option?
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