The Different Types of Options on the IQ option platform
What are options? An option is a contract that gives you the right to buy or sell an asset at a preset price at a specified moment of time in the future.
Example of an option
Let’s take an example. Company A sells petrol. The cost price of petrol includes among other things the cost of raw material. In our case it’s oil. Oil prices are changing constantly. So the company decides to use an oil options contract in order to mitigate the risk of oil price increase.
So how does the option contract work? For example, oil now costs 100 dollars per barrel. Company A goes to an exchange and concludes an options contract with a broker for purchasing oil at 100 dollars next month.
The company has to pay the cost of the option contract also called the option premium to the broker. For the sake of the example let’s say the option premium is 10 dollars. Now let’s study two scenarios.
One month later the price of oil rises to 200 dollars per barrel as Company A has the option contract for purchasing oil at one hundred dollars, it can use its option contract, exercise the option and buy oil at the agreed price of 100 dollars. Thus saving one hundred dollars per each acquired barrel.
Example use of put option when oil price is going up
But what if the oil price drops to fifty dollars. In this case, there is no point in buying oil at the agreed price of 100 dollars. As the commodity is available at fifty dollars on the market. In this case, the company does not exercise the option and pays only the option premium to the broker.
Example use of put option when oil price is going down
Specific terms for trading options
Options trading has its specific terms:
The purchase time is the time when a trader buys an option.
The expiration time is the predetermined point in the future after which an option ceases to exist.
The price of an option contract is called an option premium.
The strike price is a target level that the opening price of an asset should go above or below for the position to close in the money.
Main types of options at IQ Option
There are two main types of options. Call Options ‘calls’ and put options ‘puts’. A call option gives you the right to buy an asset, a put option gives you the right to sell an asset.
Call and put options
Options trading at IQ Option
Options is a popular trading instrument that has many variations at the best crypto platform. If you choose binary options trading you should predict the asset price
direction whether the price will go up or down compared to the opening price.
Digital options allow you to choose strike prices. Thus managing your risk more efficiently.
Foreign exchange options or FX options give you the right to exchange one currency for another at a preset exchange rate at a specified moment in time in the future. FX options have strike prices like digital options. On IQ Option platform you can trade binary options, digital options and FX options.
Guide to IQ Option Tournaments
One of the features that make IQ Option stand out is their tournaments. These pit traders against each other competing to earn a piece of the prize money. Besides being fun to participate in, IQ Option tournaments allow you to test your trading skills with binary trading option. They’re also a great way to make tons of cash prizes with a little investment.
How IQ Option tournaments work
IQ Option will regularly announce upcoming tournaments on their website. You can also get information regarding upcoming tournaments through your trading interface. Simply click on the “Tournaments” feature on the left of your trading interface. Tournaments will run for 1 day to 1 month. The entry fee ranges between $2 to $20 depending on the duration and the prize pool.
You can only trade options in IQ Option tournaments
To join, you’ll be required to invest an entry fee. A percentage of this fee – typically between 60% and 80% is placed into the prize pool.
Once, you’re registered, IQ Option will create a special tournament account with a fixed amount. All tournament participants will get the same amount to trade with. Your primary goal is to grow your account balance over the tournament period.
At the start of the tournament, IQ Option creates a special leaderboard. This can be viewed by all tournament participants. Its main purpose is to show who’s made how much money in their tournament account. It also promotes transparency.
Leaderboard at IQ Option tournament
IQ Option also states how the prize pool will be distributed. For example, among the first 10 participants. Your goal, therefore, is to be ranked among the first 10 participants. The person who makes the most money on their tournament account gets the largest share of the prize pool. However, this amount isn’t fixed. How much you’ll be awarded depends on how much you’ve made in your account.
Prize pool distribution
IQ Option allows unlimited rebuys. A rebuy is simply a deposit made to your tournament account using real money. For example, if the tournament account has $100, you can rebuy by depositing $100 from your real account. Your tournament account balance will, therefore, be $200. The rebuy amount is added to the prize pool.
Note that rebuys are only permitted if the current balance and profit from open positions is less than the starting balance.
If you’re among the winners, your prize money will be automatically deposited to your real account.
That’s it about IQ Option tournaments. Have you participated in any tournament on the platform? How did you perform? Kindly share your views in the comments section below.
6 Reasons Why Binary Options are Popular
Financial traders have a diverse range of markets to choose from. These includes forex, stocks, CFDs, indices cryptocurrencies and options. Binary options are relatively new compared to other financial instruments (except cryptocurrencies). However, many traders consider them high risk. Some will even label options trading the same as gambling.
The truth is, any form of financial trading involves risk. Money can be made or lost regardless of the type of financial instrument online trading platform.
As more traders realize this fact, they’re turning to options trading as a way to make money. Online options brokers are now attracting millions of traders from all over the globe.
But what’s making binary options so popular? Below are six reasons.
You can make money whether the markets are trending or not
Most financial markets will only make you money when the markets are trending. For example, if you’re trading stocks, you can only make money if the price goes up or falls relative to the strike price. In addition, the price change must be significant enough for you to make a good profit.
With options you can profit regardless of market direction
Binary options are much different. All you need to do is predict whether the price will be higher or lower after a certain amount of time. Since options have a fixed return, a small change such as 0.001 in the direction you predicted will earn you profits of up to 90%. This comes in handy when markets are ranging. That is, the asset’s prices are experiencing small price movements.
Investing in binary options doesn’t require a huge investment
One of the reasons why options brokers are increasingly becoming popular is the low deposits they require to get started. You can easily open an binary options trading account for as little as $5. In addition, you can open an options position with as little as $1. With returns of up to 90%, a $1 trade can make you $.90 within a short amount of time.
Assets such as stocks and cryptocurrencies bought in exchanges require a huge investment. For example, if you wished to buy Bitcoin, you would need to pay at least $5000 for a single coin. In addition, you don’t know whether the Bitcoin value will increase in the near future.
Binary options offer a fixed return
Another reason why binary options are so popular is that you know the potential profit even before you open your trading position. This is calculated as a percentage of the amount you invest in a trade. Most platforms offer returns ranging from 60% to 95%.
The return depends on the assets you’re trading and volatility. This means that returns on a particular asset will change during the day. Knowing this, you can easily choose to trade during sessions where your trading platform offers the highest returns. This ensures that even if your trades end up losing, you can easily recover these losses through several winning trades.
The profit you might earn when trading other financial instruments largely depends on the asset’s price movement. If the price moves further in the direction you predicted, the higher your profit and vise versa.
The maximum you can lose is the amount placed on a trade
In addition to knowing how much you can earn through profitable options trades, you also know how much you stand to lose even before you enter position. The maximum amount you can lose on an options trade is your trade investment. Some brokers such as IQ Option also allow you to exit trades before they expire.
If the trade was turning a profit, IQ Option will give you a portion of what you were to earn. If it was losing, a portion of your trade investment will be deducted. This is called profit after sale. For example, if you had invested $10 in a trade with 80% return and the trade goes your way, you might decide to exit before trade expiry.
In such a case, IQ Option could give you $3 to $5 as profit and keep the remainder. If the trade was losing and you decide to exit, IQ Option might deduct $3 to $8 from your initial investment. This allows you to avoid losing the whole $100 investment.
Loses are limited with options
When trading financial instruments such as forex and commodities, you stand to lose more than your trade investment. If the trade goes against you, your percentage losses might exceed 100%.
At this point, your broker will use your account balance to keep the trade open. That’s why it’s always advisable to use stop losses when trading such markets.
Trading options is easy to learn
Some traders will argue that options trading is hard. But this isn’t the case. Options traders will use the same charts, tools and trading strategies used by traders in other markets. In order to succeed as a binary options trader, you must learn how to read charts, use indicators, have a trading strategy and understand trading psychology. Traders in other markets must also do the same.
Learning options trading is easy
The interesting thing is that, traders who have experience in other markets such as forex often find options trading quite easy.
You can earn profit in as little as 1 minute
In most markets, you’ll have to wait until the underlying asset’s price reaches a predetermined strike price. This can take seconds, minutes, days or even weeks. Binary options are designed such that you can make profit in as little as 1 minute (Note: we don’t recommend trading short expiry times).
The reason for this is that options are set to expire after a specified period. In addition, all you need to predict is whether the price will be higher or lower than the strike price upon expiry.
That’s it about why binary options are popular. Do you have any additional reasons why we should trade option with IQ Option? Kindly share them in the comments section below.
How to Use the IQ Option #1 Support and Chat Feature
IQ Option boasts hundreds of thousands of traders. It’s one of the platforms that’s designed to meet trader’s needs. Many of the platform’s improvements are allegedly made based on trader suggestions. One quick way to share your ideas with IQ Option staff is through their chats and support feature. But that’s not all you can do with this feature as you’ll find out in this article.
Overview of the IQ Option chats and support feature
This feature is found on the right hand panel of your trading account. You can access it on both the practice and real accounts. However, only real account holders can message chat members on this feature.
The chat and support feature allows traders to interact with each other directly. However, there are rules to adhere to. And in order to be allowed to communicate with other members, you must agree to these.
Is the Martingale Strategy Suitable for Money Management in Options Trading?
One of the main ways to sustain profitable options trading is money management. You’ll want to minimize losses and increase your winning trades. This way, winners will offset the losing trades and leave you with some profit.
But when you incur a loss, adjusting your trading to reflect the remaining capital is vital to long term trading. Common sense dictates that you lower the amount you place on trades following a loss. But one strategy advises the opposite. This is the Martingale strategy.
How does the Martingale strategy work?
The Martingale strategy requires that you increase your bet amount even if you lose. That is, if you lose on a trade, the amount you invest on the next trade should be a multiple of what you lost. If you lose again, increase your investment until you finally get a winning trade. Once you get a winning trade, start all over again with the initial small investment.
How does the Martingale Strategy work? What’s the point of increasing your stake even after losing? Martingale practitioners argue that if you eventually hit a winning trade, it will be able to offset the losses incurred in previous trades.
See Martingale evangelists view options Bitcoin Trading Platform like betting. Each trade has a 50/50 chance of winning or losing. In addition, there’s no way that you can have an infinite losing streak. More so, the probability of losing decreases with the number of trades you make.
Can Martingale be practically applied to options trading?
Probability vs psychology
If you view the Martingale strategy from a probabilistic standpoint it can work in options trading. Every trade has a 50/50 chance of winning or losing. In addition, it’s unlikely to lose many consecutive trades.
Every trade has 50/50 chance of winning or losing On the other hand, if you view this strategy from a psychological standpoint it’s probably the worst money management strategy for an options trader.
No one wants to lose money. And while a trader might be comfortable losing small amounts in the first few trades, fear might set in when the losses accumulate.
Conversely, winning the first few trades might motivate the trader. However, a single huge loss in subsequent trades could wipe out all profits generated by the small winners.
Long term profitability isn’t possible
For the Martingale strategy to work, you’ll need huge amounts of capital at your disposal. Even then, you’re counting on the winning trades to offset the losses. You might have winning trades at the onset.
But one losing trade in the future might take out a huge chunk off your account. On the other hand, a winning trade might offset the losses incurred in earlier trades. However, whatever profit is left might be too small to justify your huge investment in that one single trade.
There’s no guarantee that you’ll eventually hit a winning trade
Although Martingale advocates argue that there’s no chance of getting an infinite number of losing trades, it’s still possible to make so many losses that your account is totally depleted.
Without hitting a winning trade. Even if you get a winning trade, it might not be enough to offset previous losses meaning your account will have incurred a loss. Over time, you might find that your account is slowly being depleted until it’s wiped out.
Complete Beginners Guide to IQ Option Forex Trading
Many new traders will opt to try out options over other financial instruments. They’re easy to trade and offer a fixed profit return. Besides options, IQ Option also offers other financial instruments. Among these is forex which will be my focus in this guide today.
Forex overview
The Foreign Exchange (Forex or fx) market is the largest in the world today with over $1 trillion being exchanged daily. This market involves exchanging different currencies.
The fx market developed as a result of trade and other financial transactions occurring between countries, institutions and individuals. For an fx transaction to occur, you must sell one currency to buy another or buy one currency by selling another. This means fx transactions involve currency pairs. For example, if you’re trading EUR/USD and 1.80086, it simply means that you can buy 1 Euro for 1.80086 US Dollars.
Where do forex prices come from?
Forex prices are usually determined by supply and demand. I use the term “usually” because there are other forces such as central banks, governments and even forex brokers who might manipulate forex prices.
But let’s stick to supply and demand. Each currency pair has a bid and ask price. The bid price is the amount someone is willing to sell the currency at a specific time. The asking price, on the other hand, is the amount someone is willing to pay for a particular currency at a specific time.
Now knowing who sets the prices isn’t that important for traders. Why?
Trading forex on IQ Option doesn’t require you actually own the currency you’re buying or selling. Your primary objective is knowing how to profit from buying and selling currency pairs.
I’ll cover this next.
How do you make money trading forex on IQ Option?
Trading forex involves buying and selling a currency pair. For example, if EUR/USD is trading at 1.1576/1.1578 it means that you can buy 1 EUR for $1.1576 or sell 1 EUR for $1.1578.
Now, if you decide to buy 1EUR for $1.1576 you’re hoping that its price will rise in the future allowing you to sell at a profit. Conversely, if you sell 1EUR for $1.1578, you’re hoping that the price will fall in the future allowing you to buy it back at a lower price.
The difference between your buying or selling price and the price at which you’ll buy or sell the currency for in the future will be your profit or loss.
So if you bought the EUR/SD pair at 1.1576 and the price rises to 1.1580, your profit would be $0.004.
That’s a small amount for most traders. But consider if you bought 100 lots. Your profit would be multiplied by 10000 earning you a profit of $40.
Note: A lot comprises 100 units. So if you bought 1 EUR/USD lot, it simply means you bought 100 EUR.
Who are you trading against in the forex market?
The forex market comprises dozens of different actors. Remember that the value of a currency is largely affected by its supply and demand. This means that when buying or selling a currency pair, you’re essentially competing against small actors such as independent traders. You’re also competing against big actors such as banks and governments.
But this shouldn’t be a cause for concern. No actor is big enough to control the forex markets, therefore, giving you an equal opportunity to make money as a small trader.
Forex vs Options markets
I’ve written the IQ Option Forex vs IQ Option Options Which is More Profitable?
This comprehensive guide will teach you more about the differences between these two markets. However, here’s a rundown of the 6 major differences you’ll encounter when trading forex on IQ Option.
Forex doesn’t have a set expiry time
When trading options, you’ll have to decide when the trade will expire. This can be as little as 1 minute or more than 1 month.
Forex, on the other hand, has no fixed expiry time. The trade is only exited if you manually close it, or if the price reaches a pre-set stop loss or take profit point. This means a trade can remain open for minutes, hours or even days.
Stop losses
The stop loss is a tool that’s used to limit the amount a forex trader can end up losing. For example, if you invest $100 in a trade, you can set your stop loss at 10%. This means that if the trade goes against you and your invested amount falls to $90, Iqoption will automatically close the trade.
When trading forex, losing trades can eat into your account balance. This means that if you invested $100, your losses can exceed this amount. Stop losses allow you to protect your account balance and limit losses on each trade.
Take profit
Take profit works the same way as the stop loss. There’s one major difference though. The take profit feature automatically closes the trade when a specific profit amount is reached.
For example, if you invest $100 and set your take profit at +$50, the trade will automatically close when a $50 profit is made.
This feature makes it easy to lock in and secure profits made on each trade. Imagine a trade where you had the opportunity to make $50 but the markets reversed. The profits you’d have earned start to dwindle simply because you didn’t take profits when the markets were favourable.
Leverage
IQ Option offers leverage to forex traders. What this simply means is that you are able to multiply the profitability of every trade. For example, if you trade using $100 and apply the leverage of X50, this essentially means you’re trading with $5000. In turn, the profits you make on your trade will be 50 times higher than if you had simply traded using $100.
Although leverage can be a great way to increase your profits, you should use it with caution. Always use it alongside other tools such as stop losses and take profit.
Trade exit
One thing that makes options trading easy is that trade exit is fixed. If you enter a 60-second options trade, you’re assured that you’ll know whether you’ve made a profit or not within 60 seconds
Forex trading is a bit different. Trade exit is determined by one thing – price. Unless the price reaches your strike price, the trade will remain open. This means that it can take minutes, days or even weeks before the trade exits. You can however manually exit the trade if you want to on the IQ Option platform.
Many forex traders, therefore, choose to trade currency pairs where price fluctuations are likely to occur during a trading session. This way, they’re sure that their strike price (take profit or stop loss) are going to be hit at a specific point. So if you want to trade forex, it’s recommended that you trade when the currency pairs you invest in are likely to be affected by a news item.
Returns
Binary Trading Option traders will get a fixed return per trade. Forex traders, on the other hand, have the chance to earn returns exceeding 100%. The reason for this is that how much profit you make as a forex trader largely depends on how far the price moves. The further the price moves according to your prediction, the higher the profit potential.
Now couple this with leverage and you have the opportunity to make profits that can be as high as 500% or more. This makes forex trading a good way to make huge returns in the financial markets.
There’s a downside however, your losses can also be much higher than the amount you invest per trade especially if you’ve not set any stop losses.
Now that you’ve got a basic understanding of how the forex market works, your next step involves trading the forex markets. The Ultimate IQ Option Forex Trading Guide for Beginner Traders is a post you’ll want to read to get you started.
A SIMPLE TRADING PLAN FOR MAKING GOOD MONEY ON IQ OPTION
For many new traders, coming up with a trading plan is one of the difficult activities they must engage in. Trading without a plan is like blindly shooting in the dark. You’re relying on luck to make money. And luck never works when it comes to trading.
After scouring the internet for good trading plans, I found that many of these did not cover the essential details. What many teach is how much to invest per trade. But they don’t cover other important aspects.
That’s why I’ve created this simple guide. Let’s get started.
What should go into your trading plan?
How long it will be in use
The first thing you must decide when creating a trading plan is how long you intend to use it. It could be one day, a week or a month. My trading plans are usually designed to last 1 week. This gives me enough time to test it and analyze its efficiency. If it works, I’ll continue using it for up to 1 month.
As long as I’m using this plan, I will document all trades I entered into. Luckily, IQ Option provides the trading history feature. This comes in handy when I want to have a quick glimpse of how my trades for a particular day did.
The trading strategy to use
There are many trading strategies out there. However, each trading plan should have one trading strategy. For purposes of this guide, I’ll use the TLS method coupled with support/resistance and the RSI indicator. The Guide to Using the Trend Level Signal to Make $249 should get you started with this strategy.
The reason why I chose the TLS method is that it’s simple to implement.
Asset and market to trade
Next, you’ll need to decide which asset and market to trade with best crypto platform. The asset could be a currency pair, stocks, indices etc. The market could be options, forex, CFDs etc. You should stick to one asset in one market. This makes it easier to keep track of your progress.
Once you’ve chosen your asset, you’ll need to decide when to trade. This largely depends on your timezone and your trading strategy.
Trading account
This covers three essential points.
The first is the amount you will deposit for the period of the trading plan. This is your account balance. You objective is to deposit a specific amount and then use it to make profit. If this amount is depleted, you should not make another deposit until you’ve created a different workable plan.
The second is how much you’ll invest per trade. This could be a fixed amount like $10 per trade. It could also be profits made per trade allowing you to return the initial investment to your account balance.
Finally, you should have a profit target. Having an overall profit target allows you to decide how much you want to make per trade as well as how many trades you need to make to achieve this target.
What to do when things don’t go according to plan
Sometimes, trades don’t go according to plan. For example, you might suffer consecutive losses leading to depletion of your account balance. In other hand, you might reach your profit target sooner than expected.
So what do you do when such scenarios occur?
Do you continue trading or stop trading? This is a subjective decision only you can make. However, make sure that the decision you make enables you to protect your money rather than lose it trading on IQ Option.
This also involves deciding what to do when emotions start clouding your judgment. If you’re tempted to increase your trade amount to recover losses, what do you do? This part involves identifying actions that you must take to prevent emotion-driven trading.
You’ve just learned the basic features that should go into your trading plan. Remember, a bad plan is better than no plan at all. Always ensure that you have a trading plan before making any trade. It could mean the difference between making money and losing it.
Now!, 12 Question you could ask your self to write down your own personal Trading plan.
How long it will my trading plan be Used?
Asset and market to trade?
What trading strategy do I use?
What expiration time do I use
What time frames do I Trade on?
What extra tools do I use? >> Check our Free Trading Tools!
Trading account Size?
Money Management?
Maximum Number of Trades per day?
Maximum Loses?
What are my Profit targets?
What happens if I don’t make my targets?
Of course, your trading plan is personal, and you can adjust question to your self.
Kindly share your own trading plan in the comments section below, so other traders can learn from yours.
