Which Side of the Trade?
With the amount of the trade decided, we now choose the side of the trade we’re going to opt for. When trading with High/Low options, we have to decide if a product is likely to go up or down within a pre-set duration of time, with commodities, currencies, equities and indices all options to trade on. For example, we have the option of taking a position on whether Microsoft shares, Natural Gas prices, or the US Dollar vs. the Japanese Yen will be higher or lower in an hour’s time. If we predict correctly we’ll make a gain. If we’re wrong, we’ll be unsuccessful.
One touch options give traders the ability to decide whether they think the product in question – currently trading at a certain level – will at the end of a pre-arranged time period finish above or below a certain threshold. For example, if gold is currently trading at 1166.86, traders would need to decide whether they think by the end of the trade gold will have risen above a level of 1168.02, or below a level of 1165.74, for example. As with High/Low trading, by predicting correctly we’ll make a profit, but if we’re wrong we’ll lose our stake.