In this lesson, we’ll explore how to trade the Daily Reset Indices using Digital Options, specifically focusing on Higher/Lower contracts. Understanding how to leverage these tools effectively can enhance your trading strategy and improve your performance in the market.
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What are Daily Reset Indices?

Daily Reset Indices, such as the Bull Market Index and Bear Market Index, are designed to simulate markets that trend upward or downward within a 24-hour period. Each day, these indices reset to a base value of 1000, making them ideal for short-term, directional trades, particularly with Higher/Lower contracts.
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What are Higher/Lower Contracts?

With a Higher/Lower contract, you are predicting whether the index price will be higher or lower than a chosen target price, known as the barrier, at the contract's expiry. The price at the end of the contract is the only factor that matters—any price movements earlier do not influence the outcome.
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How to Trade Higher/Lower Contracts

Steps to Execute a Higher/Lower Contract

1. Set the Contract Duration: Select a time period for your contract ranging from as short as one tick to as long as 24 hours, as long as it fits within the time frame before the index resets.
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2. Choose a Barrier: Decide on a target price above or below the current price:
   
   • A barrier above the current price is marked with a “+”.
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   • A barrier below the current price is marked with a “-”.
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Example Trading Scenario

Imagine you are trading the Bull Market Index, which generally trends upward during the day. Based on your analysis, you anticipate that it will continue to rise. You decide to execute a Higher contract with the following details:

• Duration: 2 hours
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• Barrier: Current price +10 points
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• Initial Stake: $10

In this scenario, if the index price exceeds your barrier by at least 10 points at the end of the 2 hours, you will realize a profit. If the price does not breach the barrier by expiry, your loss will be limited to the initial stake of $10.
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Important Considerations

• Start Small: It's crucial to begin with small stakes while you learn the nuances of trading. As you build confidence and experience, you can gradually increase your investment amounts.
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• Consider Contract Duration: Opt for shorter contracts (e.g., tick contracts) when you are ready to make quick decisions. Longer contracts may provide the market more time to move in your favor, which could fit more patient trading strategies.
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• Practice: Utilize a demo account to experiment with different Higher/Lower strategies across various assets. This practice helps you refine your skills without the risk of losing real money. Once you feel confident, you can transition to live trading.
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Conclusion

In conclusion, trading Daily Reset Indices through Higher/Lower contracts offers an opportunity for traders to speculate on short-term price movements effectively. Understanding the mechanics of these contracts, coupled with disciplined risk management and practice, can position you for success.

In our next lesson, we will focus on trading the Jump Indices using Matches/Differs Digital Options. Stay tuned, and happy trading!