IQ Option strategy
Traders in the online trading scene can either decide to draft their personal strategies or use those recommended by their brokerage firm.
On IQ Option, you get unfettered access to multiple trading types, making it seamless to make investments that are certain to yield high dividends.
Ordinarily, binary options, over the years, have been considered a simple and keno-themed financial instrument. The main goal? Make accurate predictions on an asset's future.
Consequently, investors have to rely on speculation and their own intuition, hoping that an investment tows the path of a specific direction. They either yield profits after making a right guess or lose the capital when a premise is wrong. It's that straightforward.
Furthermore, binary options are somewhat similar with other investment forms. However, if you use a brokerage firm to trade, you're quickly reminded that this investment variation has no guarantee. Here, when a trader holds a binary option asset, there are two possible scenarios: yield dividends or lose everything.
Description of the Platform
IQ Option is an online trading platform that features options, forex, cryptocurrencies, and stocks in numerous jurisdictions, inclusive.
Originally, IQ Option started out as a platform that majored in binary option solutions. After some time, they ventured into other financial asset forms.
In the subsequent paragraphs, we aim to take a look at vital points inherent in binary trading South Africa alongside their regulations and strategies. Our esteemed readers would also get pointers on the various IQ Option strategies present and how they can facilitate successful trades with binary options.
How do Binary Options Differ from Other Financial Instruments?
Binary options whilst being similar to other financial instruments, are distinct in several ways. Here are some things that make binary options different from cryptocurrencies, forex, and stocks:
If you're a trader who wants assets that are simple in every ramification, investing in binary option assets is the way to go. Unlike other trading instruments, binary options don't involve daunting processes as they feature only two outcomes.
Therefore, traders that are low-skilled and new to the scene prefer binary options as it doesn't require lots to start up and manage. However, it's a level playing field as all investors have an equal opportunity to win when they incorporate the right IQ Option strategy.
- Risk Control
With binary options, traders are acclimated with their prospective losses or dividends before making an investment decision. Here, trading tools like the Stop Loss Feature ensures that traders have their losses capped to avoid huge losing margins.
The ability to control the level of risk makes binary options an asset class that's acceptable by traders globally.
Binary options is the only financial instrument that doesn't get affected by the volatile nature of other online assets. After you make a trade on a specific investment direction, everything relating to volatility becomes non-existent. Consequently, the worry that most traders share when it comes to rising and falling prices are effectively nullified.
The downside is that there’s no potential for higher earnings regardless of how the market becomes.
As a result, this asset class isn't available via Peer-To-Peer (P2P) or any other transaction means. Consequently, traders have to choose an online broker for trading that's secure and trusted across the board before opting in for binary options trade.
However, with fraudulent platforms on the rise, traders can fall victim to scams and other negative repercussions. For context, some binary trading sites feature false index prices and payouts using illegal fees and practices.
It's typical of trading platforms to give a definitive timeframe for binary option trades before they start. After this period, the direction of an is expected to go towards the trader's predicted position. That said, traders can increase this limit by placing higher trade stakes.
Unlike other assets that accords traders the opportunity of extending their transactions, that of binary options is somewhat fixed, and it can only be extended when the trader and platform reaches a compromise.
Common Examples of IQ Option Trading Strategies
Trading strategies employed by traders are used to determine their status in the long run. Well, this analogy might be confusing at first, given that the binary option is similar to keno. However, all an investor has to do is make intuitive and speculated guesses. After a premise is put forward, the trader has to await outcomes.
To ensure that losses are low, there are so many things that a trader should consider before going ahead to make speculations.
For starters, the best IQ Option strategy for that trade must be drafted out as they often rely on use cases and scenarios. For context, a strategy that works wonders on a particular trade might not yield positive dividends on other trades.
The following are some of the most common IQ Options strategy types for binary trading that you can employ.
- Momentum Trading
You may take this strategy for its literal meaning. Momentum trading requires following an asset for a while and waiting until it shows quick movement before opening the deal. The move may be upward or downward, while you may open both short and long contracts.
Therefore, it means that the trader should closely watch the fundamental and technical reasons that may trigger an asset's rapid price changes. In fiat and cryptocurrencies, you'll need to pay extra attention to technological factors, such as a new coin feature, as solid growth and fall trends may begin without any fundamental reason.
For publicly traded companies, you'll have to be abreast of earning reports, major news, and other events about the company, as these are everyday influencers of massive stock prices.
- Scalping Strategy
The idea of scalping is straightforward. Here, small trade victories are tantamount to one huge win. Using the scalping strategy, traders must ensure that they have buy and sell limits in place before making speculations on the direction an asset will take. Traders that engage in scalping don't have to wait long periods as everything happens in a relatively shorter timeframe.
With trades happening in a short time period, traders must keep calm as they'll need to make split second decisions. Also, there's no fundamental assessment in scalping due to the limited time associated.
- Pullback Trading Strategy
This IQ Option strategy requires that traders seek out Exchange Traded Funds (ETFs) or a company stock that has undergone a good run. Here, investors have to sit back and wait until an asset makes a minor direction retracement.
As a trader, you'll have to wait for periods where the retracement seems like dying off and when an asset is about to return to its original state before opening deals. It's also worth noting that these retracements can be short-term and shouldn't be classified as an emerging negative trend.
You may also use this strategy for assets on a bearish run. Always follow your investment until it exudes a positive upward movement and make stakes when an asset is at its barest minimum.
- Breakout Trading
Here, the support and resistance levels binding each asset are put into good use. Typically, assets feature thresholds over things they can't outgrow (the resistance). Nonetheless, assets trade at their lowest after retracement and hitting its peak.
However, trading experts and professionals believe assets exceeding the ambits of the resistance aren't likely to grow further. Consequently, traders have to place stakes on such stocks, ETFs, or coins, and hope that they keep up with their upward rally.
That said, asset prices may move above and below resistance without hindrance in some cases, resulting in the Breakout strategy's failure.
- News Trading
For traders that are interested in the fundamental aspects binding binary options, news trading is a "must use" strategy. This strategy reckons that vital news and happenings that occur on a global scale influences the trading world massively.
For example, a major political or economic happening can change the prices of assets, regardless of whether or not they're stocks, fiat currencies, or commodities.
While good news promotes high dividends in the trading industry, unsavory information can result in a downward spiral. However, it's crucial to note that this strategy isn't the most straightforward as predicting bad scenarios can be daunting, unless you're a clairvoyant.
Since the market is known for its unpredictability, good news can, sometimes, result in the decline of assets. Therefore, you must be quick on your feet and decide how these events can influence your trading decisions.
Note: You'll have to realize that although all strategies featured in the above list have their perks, none is perfect. From time to time, you should expect negative results. However, that shouldn't be the end of the world as there are other strategies to try out.
Always go the long haul with the option that suits your trading journey. Alternatively, you might want to employ all these strategies at once on rare occasions.
Losing several deals in a row doesn't mean the strategy you employed was problematic. Sometimes, you might be on a losing streak.
While no trader wants to be on the wrong side of proceedings, it can be counterproductive to switch between these various strategies regularly. Here, even though a particular IQ Option trading strategy fails, you shouldn't discard it completely after your first try.
Examples from Real Online Trading
Below are some real-time examples of the IQ Option strategies highlighted above:
- Momentum Trading
So let's say David was following Amazon's stocks during the Covid-19 pandemic as it grew slowly. Then, these stocks hit a sudden spike.
Consequently, David placed a $4,000 call option that featured a return of 70%; indicative that the stock would mark an exponential growth. Well, his guess was correct and therefore he receives $2,800 in rewards aside from his capital.
Grace works in a local grocery store and she doubles as a small-time binary trader. She's always online and waiting to find cryptocurrencies that'll exude minor price changes.
When she finds one, she has a limited time period and has to set limits so that she won't incur significant losses.
Bitcoin experienced a little fall before embarking on a good run during this year's first quarter.
Before this cryptocurrency bounced back, Magaret employed the PullBack strategy and predicted that Bitcoin will rise. Consequently, she places s $5,000 call option and gets $4,000 in returns.
- Breakout Trading
Thomas was an ardent follower of the Bitcoin chart until it reached a resistance level of $50,000.
He expects this positive rise to continue and places a wager worth $10,000 at 70%. Then, he's rewarded with $7,000.
- News Trading
The central bank has been engaging in several meetings within the last week. This scenario has a significant impact on the forex trading market.
Mrs. Nusa is aware of this fact and that prompts her to make trading decisions after she's sure of outcomes binding to those meetings. For example, raising rates increases USDT price, while cut rates are often bearish.
The 5 Most Applicable Binary Options Strategies
It's necessary to understand that online broker financial trading isn't limited to IQ Option. Therefore, there are general strategies applicable to this branch of financial investment.
A few which are useful in real-time operations include:
- Fundamental Analysis Strategy
Fundamental analysis involves the assessment of the general attributes and performance of an asset before placing wagers.
This strategy is most applicable to company assets. Here, the primary aim is to have an overview of the investment you want to trade.
Before trading in a company's stocks as a binary trader, you have to know the company's financial position and ethical history. It's also essential to study relevant documents, such as income statements, balance sheets, and cash flow statements, to make an intelligent decision.
Other considerations under this strategy include partners' and employees' satisfaction.
- Technical Analysis
The technical analysis concerns studying an asset's past behavior using aids like charts and tables to draw a likely map that the investment might follow. Unlike the fundamental analysis, this strategy doesn't aim to find the inherent value of an asset.
Using this technique, you have a comprehensive understanding of the asset in which you're investing.
That said, some tools for technical analysis are Moving Average and Bollinger Bands.
- Basic Option Strategy
The basic option strategy is designed for a trader who wants to avoid total losses on their deals.
To use this technique, the reader selects an underlying currency or asset and places a call option if the chosen purchase moves towards a positive direction. At the same time, the trader makes a put option on the same premise.
- Algorithms and Signals
Some apps are developed to collate and analyze market data you may use to invest in the market. Such apps are also a type of practical strategy. All you need to do is install these applications in your system and use the collated data.
You may even set the app to handle trades for you. This strategy is similar to the expert advisors (EA) on MT4 and MT5 platforms used by investors in the forex South Africa market. These machines are generally called Robo-advisors.
- Cointegration Trading
This technique works only for two assets with similar behaviors. These may be stocks, national currencies, or cryptocurrencies with little to zero difference between them in the industry. However, these assets tend to have minor differences once in a while before reconciling.
Your strategy is to follow both assets until one of them deviates from its usual trading behavior. Now, you wager on that asset returning to its initial position within a specific time.