How to trade IQ Option’s digital options

Notice to EU traders: Digital Options are not available on the IQ Option platform for traders from the European Economic Area.

Digital options on the IQ Option platform

IQ Option’s digital options are very similar to binary options in some respects. However, unlike binaries which offer up to 100% profit, returns on digital options can be up to 900% from the invested amount. In this in-depth tutorial, we will cover:

1# How digital options differ from binary options

2# How to trade digital options

3 # 5 easy actionable tips you can follow which could help you on your journey to profitable digital options trading.

When trading with real money, your capital is at risk.

How digital options work and how they differ from binary options

With digital options, you still have to decide whether the price will go up or down. What is different, however, is that you also choose your strike price. That means that you have in your own hands the profit which you can make from an option. If you, for example, choose high strike price and you will go for a call option you can earn up to 900% from your investment. If you decide to choose a strike price only a little bit higher than the current price of the asset is, you will earn for example 100%. But bear in mind that the further away the strike price is from the current price of an asset the more riskier your trade gets. That is also the reason why you are being rewarded with higher payouts in case of a correct prediction. Digital options are also obtained with the „buy out“ tool which allows you to sell your options prematurely.

Where to find strike price

Strike prices can be found on the right parallel line. Once you select your strike price you will instantly see how much you can get from a successful trade. As the price of the asset changes so do the payouts. Once you evaluate the risks and possible profits of your trade you can open a position.

How to create a digital option trade in 5 easy to do steps

  • 1. Select digital options in the main table where you can now also choose from Binary, Forex, CFD (Crypto)

  • 2. Click on an asset you want to trade

  • 3. Choose your strike price

  • 4. Open either a Call option or a Put option

  • 5. Confirm the trade

When trading with real money, your capital is at risk.

#5 Strategies & Tips how to trade IQ Option’s digital options

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 the growth or decrease of 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 a piece of 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 the 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 strategy

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 news that could greatly affect price, so, for example, earnings reports. I found this strategy at IQ Option, but it seems like they deleted it for some reason. So, make sure you have tested the strangle pattern strategy first on a demo account so you would not risk losing money.

When trading with real money, your capital is at risk.

Michael

6 Comments

  • Hi Mike, I want you to educate me more on binary, digital and crptocurrency trading. Please, can u get in touch with your terms?

  • Hi, I just checked on IQ options website and the Digital Options, over there, are limited to 15′ Expiration time…
    At the same time, on IQ Options page, Binary Options have the widest Expiration time limits…
    Which is exactly the oppposite of what you state on the article “Digital options are not characterised as short-term investments, as binary options at IQ Option are.”
    Have the rules changed since you wrote your article or have I misunderstood something?
    Thanks a lot!

    • Hello Nathan,
      Digital options should not have any expiration time, the trade ends only once the targeted price is reached or when it goes in the opposite direction and the current price is too far away from your targeted price.
      Kind regards,
      Michael

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