Digital options at IQ Option are available for a while now. We have been trading them from their beginning and we have decided to make a brief list of tips which could help you on your journey to profitable digital options trading.
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Risk Warning: Your capital might be at risk, as all types of trading carry certain risks.
#5 tips for trading digital options at IQ Option
Tip #1 Think about the future
- Digital options are not characterised as short-term investments, as binary options at IQ Option are. That means you have to make an analysis from a long-term perspective. They also do not have an expiry time so you have to ask yourself “Is there anything that might influence growth or decrease my currency pair when my position is opened?”. If you find out that there is, you need to decide what impact the news might have on the currency pair. Will you benefit from it? Or is it better for you to close your position before this news is announced?
Tip #2 Protect your trades
- With digital options, you can implement hedging to your trading plan. So if you assume that the current position you have got opened might take a swim from an expected news you might consider to create a position which will hedge the first one. Let us suppose that you bought Motorola shares and you think that they might take a hit as Apple launches new iPhone, in order to hedge this trade you can create another trade in which you predict that Apple will go up.
Tip #3 Use Currency Correlation to your advantage
- Did you know that when you trade EUR/USD it moves almost simultaneously with EUR/HDK? And that is no coincidence, that is simply a currency correlation. Be aware of this feature of forex and avoid contradictory trading. Check the link above, to fully understand currency correlation.
Tip #4 Choose your strike price with caution
- The further your strike price is, the more you can earn. That is a fact well known with digital options at IQ Option. But you must be also aware that if the strike price is too far from the actual price, there is only a small probability that the currency pair will be able to move to this price. Such trades are very risky and they very often result in failures. So next time you are choosing your strike price, think twice! And go for higher/lower strike prices only if you are very confident with the position you are opening. Perhaps when you expect a sudden drop change in price due to unemployment report.
Tip #5 Get your information
- Is a presidency election around the corner? Or NonFarm Payrolls about to be published? Such announcements contain vital information that could have a huge impact on currency development. So I definitely recommend you to check out the economic calendar or market news directly on the IQ Option platform. This feature can be found in the left menu and it is called “market news”.
Strangle pattern – represented by IQ Option
The strangle pattern is designed for strong price movements and for situations when you are unsure in which direction the price will move. The main idea is to buy both put and call options with the same expiration time and with different strike prices. One of the possibilities to use this pattern is to choose for call options one of the highest strike prices and for put options one of the lowest strike prices. You forecast strong price changes and if they happen your profit from one of those options will easily cover the cost of both investments. The strangle pattern has best results with a news that could greatly affect price, so, for example, earning reports.
Your capital might be at risk