Highest/Lowest Tick: Trading Price Extremes

The Highest/Lowest Tick contract is a unique Digital Option where prediction is not about final price, direction, or digit, but rather about the maximum or minimum price achieved during a very short, predetermined duration. On Deriv, this is typically set over the next 5 ticks.

Two Extremum Contract Types:

• Highest Tick (High Tick): You win if the tick price at your selected position is the highest price recorded among the next 5 ticks
• Lowest Tick (Low Tick): You win if the tick price at your selected position is the lowest price recorded among the next 5 ticks

Key Difference from Other Contracts:

• Extremum Focus: Predicts local maximum or minimum price
• Fixed 5-Tick Duration: Always exactly 5 ticks
• Position Selection: Choose which tick (1-5) will be the extreme

The extremum prediction nature creates unique trading opportunities:

For High Tick Contracts:

• Win when selected tick is highest in 5-tick sequence
• 1/5 (20%) probability = Very high payout
• Predicts momentary price spike

For Low Tick Contracts:

• Win when selected tick is lowest in 5-tick sequence
• 1/5 (20%) probability = Very high payout
• Predicts momentary price dip

Strategic Implication: This contract type rewards traders who can predict short-term volatility patterns and identify which specific moment will produce price extremes.

The crucial difference is that the trade duration is fixed at 5 ticks, and the trader must select which of those 5 ticks will be the one that registers the extreme price (Highest or Lowest).

Contract Parameters:

• Duration: Always 5 ticks (fixed)
• Selection: You choose a tick number (Tick 1, 2, 3, 4, or 5)
• Comparison: Selected tick compared against all other 4 ticks

High Tick Win Condition:

• Price at your selected tick position must be strictly greater than the price of the other four ticks in the sequence
• Example: If you choose Tick 3 (High), Tick 3's price must exceed all other tick prices

Low Tick Win Condition:

• Price at your selected tick position must be strictly less than the price of the other four ticks in the sequence
• Example: If you choose Tick 3 (Low), Tick 3's price must be lower than all other tick prices

Loss Condition:

• If price at chosen tick position equals any other tick's price, trade is generally a loss
• Ties are platform-dependent but standard is loss

Statistical Probability:

• 5 possible tick positions, one must be highest/lowest
• Each position theoretically has 1/5 (20%) chance
• Payout inversely proportional to probability

Payout Examples:

• Any Tick Position: 1/5 chance = 20% probability = Very high payout
• Similar Payouts: All positions (1-5) offer comparable payouts
• High Returns: Often 400-500% on short durations

Position Strategy:

• Tick 1: Immediate spike/dip prediction
• Tick 3: Mid-sequence extreme prediction
• Tick 5: Final extreme prediction

Duration Strategy:

• Always 5 Ticks: No flexibility in duration
• Ultra-Short: Fastest contract type in Digital Options
• High Frequency: Suitable for rapid trading strategies

Very High Payouts (20% Probability):

• 1/5 Chance: Only 1 winning position out of 5
• 400-500% Payout: Very high returns compensating for low probability
• Equal Opportunity: All tick positions offer similar payouts
• Suitable For: High-frequency statistical trading

Strategic Applications:

• Impulse volatility trading
• Short-term spike/dip prediction
• Algorithmic high-frequency strategies
• Market noise exploitation

Probability Advantage:

• Higher probability than Digit Matches (20% vs. 10%)
• Lower probability than Even/Odd (20% vs. 50%)
• Balanced between extreme risk and moderate risk

Risk Characteristics:

• Limited Risk: Loss strictly limited to initial Stake amount
• High Variance: 80% loss rate (only 20% win probability)
• Statistical Risk: Market noise over 5 ticks is significant

Risk Management Considerations:

• Small Stakes: Use smallest possible stakes for testing
• High Frequency: Many trades required to realize probability
• Tie Risk: Equal prices result in loss

Very High Rewards (20% Probability):

• 400-500% Payout: Very high returns on stake
• 20% Win Rate: 1 success per 5 trades
• Break-Even: Requires 20% win rate
• Suitable For: High-frequency statistical strategies

Strategic Advantages:

• Very high payouts compensate for low probability
• 5-tick duration allows for rapid position turnover
• Suitable for automated trading systems
• Ideal for short-term volatility exploitation

Statistical Reality:

• 20% probability requires disciplined execution
• High variance demands proper money management
• Best suited for systematic approaches

Immediate Volatility Prediction:

• Sudden Spike: Predict immediate price spike (High Tick on Tick 1 or 2)
• Sharp Drop: Predict sharp drop (Low Tick on Tick 1 or 2)
• Expected Volatility: Capitalize on anticipated moment of volatility
• Quick Execution: Ultra-short duration for rapid results

Market Conditions:

• Sudden volatility bursts expected
• News-driven price spikes
• Technical breakout moments
• Round number encounters

Success Factors:

• Requires volatility prediction skills
• Benefits from technical analysis
• Suitable for experienced traders

Pullback Prediction:

• Mid-Sequence Extreme: Predict lowest point of pullback (Low Tick on Tick 3 or 4)
• Strong Trends: Trade within very strong trending markets
• Temporary Retracement: Capture brief consolidation moments
• Pattern Recognition: Identify typical pullback patterns

Market Conditions:

• Strong trending markets with brief pullbacks
• Clear momentum with temporary retracements
• Predictable consolidation patterns

Success Factors:

• Requires pattern recognition
• Benefits from trend analysis
• Suitable for momentum traders

Strategy Overview: When market is moving steadily but about to encounter significant round number or clear resistance level, anticipate a brief, initial spike before reversal or consolidation.

Execution Steps:

1. Identify market approaching key level (round number, resistance)
2. Anticipate brief initial spike before reversal
3. Select High Tick contract with Tick 1 or Tick 2
4. Execute trade betting on first upward impulse
5. Expect first spike to be highest in 5-tick sequence

Why It Works:

• Round numbers create psychological barriers
• Initial impulse often strongest
• Reversal follows initial spike
• 5-tick window captures the pattern

Step 1: Select Contract Type

• Navigate to Trade → Options → Digital Options
• In contract type dropdown, select "Highs/Lows"
• Then select "Highest/Lowest Tick"

Step 2: Select the Tick Position

• Choose your predicted tick (1, 2, 3, 4, or 5)
• Select from available tick position options
• Understand each position represents a 20% probability

Step 3: Set Stake

• Enter your stake amount (e.g., $10)
• Review the payout (typically very high, 400-500%)
• Understand 1 in 5 win rate requirement

Step 4: Execute Contract

• Click "Buy High Tick" (if you predict selected tick will be highest price)
• OR
• Click "Buy Low Tick" (if you predict selected tick will be lowest price)

Step 5: Monitor 5-Tick Sequence

• Watch tick generation in real-time
• Observe price movement across 5 ticks
• Immediate result after 5th tick

Pre-Trade Analysis:

• Analyze recent tick patterns
• Identify volatility trends
• Plan tick position strategy
• Set risk parameters

During Trade:

• Monitor tick generation
• Observe price extremes
• Track actual vs. predicted patterns

Post-Trade Review:

• Record which tick was actually highest/lowest
• Compare predicted vs. actual extremum position
• Analyze win rate vs. theoretical 20%
• Refine tick position selection strategy

Common Mistake: Forgetting that tie (selected tick equals another tick) results in loss

Why It Happens:

• Not understanding equal price loss condition
• Underestimating tie probability in low volatility
• Ignoring platform-specific tie rules

How to Avoid:

• Acknowledge tie risk amplified in low-volatility conditions
• Trade during higher volatility periods
• Understand platform tie-breaking rules
• Factor tie probability into risk assessment

Common Mistake: Believing patterns in random sequences

Why It Happens:

• Thinking Low Tick on Tick 1 means High Tick on Tick 5 next
• Seeing patterns in random data
• Emotional betting based on previous outcomes

How to Avoid:

• Market is random over short sequences
• Avoid emotional pattern recognition
• Each trade is independent event
• Use statistical analysis, not gut feeling

Objective: Test the theoretical 20% probability in real 5-tick sequences.

Step-by-Step Challenge:

1. Switch to Demo Account and select the Volatility 10 Index

2. Choose Position:

   • Select High Tick contract
   • Choose Tick 3 position (mid-sequence)

3. Execute 10 Consecutive Trades:

   • Place 10 trades with same parameters
   • Record win/loss result for each
   • Track which tick was actually highest

4. Analyze Results:

   • Calculate your actual win rate
   • Compare to theoretical 20% probability
   • Observe high payout compensation

Reflection Questions:

• Did win rate hover near theoretical 20% probability?
• How does high payout compensate for low probability over many trades?
• Were there any patterns in which tick positions won most?
• Is this suitable for your trading style?

Variation 1: Position Analysis

• Test all tick positions (1-5) separately
• Track win rate for each position
• Identify if any position shows bias
• Compare actual vs. theoretical distribution

Variation 2: Volatility Impact

• Test during high volatility periods
• Test during low volatility periods
• Compare win rates and patterns
• Identify optimal market conditions

Variation 3: Sequential Patterns

• Track 50 consecutive outcomes
• Record which tick was highest/lowest
• Identify any sequential patterns
• Test if patterns are exploitable