The Best IQ Option Trading Strategy Explained

List of assets supported for trading

Sign up with IQ Option to test out the trading strategies!

How to Prepare for a Trade?

The first step is to download the right IQ Option app or continue with sign-up and login using the web browser. Once you are inside the app, a dashboard appears, asking you to deposit and make a trade. I will always prefer the web interface, as it gives me ample real estate to work with.

Whenever you log in using your geographical credentials, IQ Option simplifies trading and presents the deposit and investment thresholds in your local currency — INR, in my case.

Login first to use any trading strategy

The way you trade depends on the account you wish to create in the first place.

Log in and access your demo and real trading accounts ASAP.

Type of Accounts

Before discussing the trading strategies, it is important to know the types of trading accounts in play.

1. Demo account: This allows you to practice every trading strategy without putting actual capital at stake. I would test out my strategies using this account.
2. Real account: This type lets you trade and earn real profits after depositing. It requires KYC verification for making withdrawals.

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Demo and real account choices

Type of Instruments

Yes, we aren’t there yet! Before I lay down the trading strategies in front of you, it is time to talk about the asset types on offer:

1. Forex pairs: 39
2. Stocks: 185
3. Cryptocurrency: 27
4. Commodities: 9
5. Indices: 15
6. ETFs: 27

Note that the IQ Option doesn’t provide spot pairs. Instead, you get a Contract for Difference and Binary Options for the mentioned instruments.

Choice of Trading Strategies: Technical Analysis-Driven

Here are the most popular trading strategies that you can rely on, courtesy of the IQ Option interface:

Momentum Trading

The first IQ Option trading strategy is momentum-specific trading. This is where you pair momentum-tracking indicators, like the relative strength index (RSI), with the price. Notice how, in this example, the price makes lower highs, whereas the RSI makes higher highs, hinting at a building price momentum.

Trading strategy using RSI

Based on the time frame of analysis, you can take a call on the upside or a Buy call for BTC. The position expiration time is mentioned well in advance and for a Buy call, you need to be in the profit for that given time.

Create an IQ Option account to access these indicators.

Scalping

This type of trading strategy takes very short timeframes into account. For instance, if you look at this Bitcoin chart from my demo trade, on a 5-minute timeframe, it is visible that the prices might correct as the 9-period EMA has crossed under the 20-period EMA and is diverging outwards. Hence, if you wish to place an order, a Sell trade might be a better option to turn a profit.

Trading strategy using moving averages

Line-based Trading Strategy

If you aren’t well-versed with the indicator, you can use the standard price action and the associated trendlines to find key breakout and pullback zones.

Notice how, in this example, I am using the 5-minute candle and waiting for it to cross above the triangle’s upper trendline. It indicates that the prices are good enough to go long. This breakout-based IQ Option trading strategy is meant for novices.

Trading strategy using trendlines

Every other trading strategy, either for trading CFDs or Binary Options, can be used as an extension.

Trading Strategies: Fundamental and News-Driven

IQ Option prioritizes news bits, sentiments, and fundamentals like no other Binary Options broker. Therefore, if you are not very good at timing the market, you can rely on the news bits — courtesy of the news trading perks and the economic calendar to place trades during key events.

For instance, if you have paid attention to the EUR/GBP news bit courtesy of the BoE delaying rate cuts, you would know how to proactively place bets on the forex pair going lower. This way, I could get my hands on the mentioned 85% payout.

News and sentiment-based trading

As a regular IQ Option trader, I rely on app-based news bits and the earnings calendar specific to stocks to get all the sentimental moves.

Install the IQ Option mobile app to access news bits on the go!

Risk Management

Regardless of the one anyone uses, the IQ Option trading strategy relies a lot on top-notch risk. Here are the ones that I rely on to safeguard my capital against market volatility:

Stop-loss Orders

Notably, this risk-management move only works if you are trading CFDs. I tried the same with my Bitcoin order, and there was a clear section on the interface asking me to place a trade-termination order.

Risk management with stop loss in place

Take-profit Orders

I need to be more active when it comes to closing profitable positions. That is exactly why I prefer using the take-profit risk management strategy. This IQ Option trading strategy locks in the profits automatically, without you having to monitor the market continuously.

Besides the mentioned risk management strategies, you can also opt for other preventive measures to safeguard your capital. These include the following:

• Tracking the pre-defined leverage limits

• Using the demo account for practicing with virtual funds

Margin Trading

This feature, IQ Option trading, is relevant for those interested in trading CFDs. For Binary Options, you can only predict the price direction. For CFDs, you can change the quantity based on the leverage you are getting for that instrument. Keeping the quantity low for high-leverage trades can be a good way to minimize capital erosion.

Margin trading with IQ Option

Finally, I prefer looking at the spread before each trade before implementing any trading strategy.

Cheat Sheet for IQ Option

IQ Option has many resources if you are new to the trading world. You can head over to the tutorials section and learn the tricks of the trade, quite literally.

Access to trading tutorials

The Binary Options tutorial club has everything for a trader, from technical and fundamental analysis basics to trading specifics like contracts trading (CFD-specific), margin trading, and more.

Mistakes to Avoid

Regardless of your trading strategy, there are a few things to note that would ensure minimal to zero mistakes.

• Refrain from Over-trading: Even as an experienced trader, I only place up to a few trades daily. While trading CFDs or Binary Options across smaller timeframes, getting trapped in a volatility storm is common. That is why weekly or daily trade limits should take center stage.
• Pay attention to market analysis. It’s crucial for fundamental analysis. The idea is to check financial news regularly.
• Have a trading plan in place: Play by your strengths. Note that the IQ Option doesn’t allow copy trading, which means you are on your own when executing trades. In the trading history tab, you need an exit plan to track your closed and open trades.

Monitor trades using trading history

Here is a quick snapshot of my trading history looks:

Besides the mentioned safeguards, you should never let emotions enter the trading space. If a position is causing you a sizable loss, I recommend terminating it.

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Final Thoughts

Every IQ Option trading strategy is unique. However, the best approach to making profitable traits is to find the right balance and deploy each strategy, depending on market conditions, sentimental factors, and other elements. Still, start with the demo account before placing trades with real money.