Trading guide for beginners using IQ Option

To a degree, starting out in trading can be compared to starting to drive, in many cases you get a second-hand car given to you by your parents or manage to buy one yourself and you have to get used to not only the rules of the road but of course how the car works, since the car can be very basic it can be very boring to drive at times and doesn’t offer many gears to change so you can’t go very fast.

Well, what if your first car was a Lamborghini? Now you have a high tech, high-performance vehicle that you must learn to master and with so many features and options it provides you the means to get the most out of your journey.

That’s what IQ Option has aimed to become, a vehicle for your investments to help you get the most out of the financial markets. Of course, this still means the principles and basics of trading should be understood.

In here we will look at, technical and fundamental analysis and how we can use them within our IQ Option platform to identify trends and potential market opportunities.

Let us start off with Fundamental analysis, this is the study of the news and economic events that might affect the asset you are looking to trade-in. For instance, if we want to trade USD/CAD we can find the latest in news about the oil war which will have a positive or negative impact on the Canadian dollar.

Here IQ Option has provided access to the latest updates concerning this, so if we see that the news is bad for oil we can also see that there may be a weakness in the Canadian dollar, this means based on our fundamental analysis we can look to buy the US dollar against the Canadian dollar.

So this would be one-way trade, using the feature of the news on the IQ Option platform, and then placing the trade as you can see on the right, you can select your investment amount and the amount of multiplier on the trade and just before you click to buy you will get a small pop up to notify you of what you’re about to trade. This would look a little different if for example, you decided to trade binary options, as you would instead of selecting a multiplier and a take profit amount/price level/ percentage, you would instead select an expiry time for how long you would want to have the binary options trade.

So right away we can see there are quite a few options to choose from when it comes to expiry times, ranging from 1 minute to the end of the month. Now of course if you want to trade short term or scalp the market, then you would only use a short time frame, this of course while profitable, will give you lower profitability on the option, as you can conduct many over the course of the day, the longer-term options, on the other hand, offer a better percentage return but of course take more time to earn them. So, this is something you as the trader will need to decide on as to how much time you have in the day or how you personally prefer to trade.

So, what about technical analysis? How does that come into play? Well, sometimes traders use either fundamental or technical and some traders use both together. Well, technical analysis is mainly looking at price action and using technical indicators to support trade ideas. What I mean by price action, is simply the way price on the chart trades, and we can study it by using methods of support and resistance or supply and demand as examples, although there are many other forms that use trendlines, we will stick to support and resistance for the sake of discussion.

But first, let’s have a look at the library of technical indicators on our IQ Option platform

While you are on your chart, you can quickly access your library of technical indicators at the bottom left.

Now some of these indicators will appear at the bottom of the chart and usually indicate a state of oversold or overbought conditions. For example, the RSI indicator or relative strength indicator measures the strength of an asset but indicating if its overbought or oversold, the way it does this is by two horizontal lines with parameters 70 and 30 if the line drifts towards the 70 lines it indicates the asset is overbought and may decline and vice versa.

So how could an indicator like the RSI help you if we use the above-stated support and resistance in combination?

Well let’s say for example we are in fact looking at a level of resistance in the asset class of currencies, in this case, USDCAD, well now price is hitting a level where previously it struggled to get to and then declined from, well now we have our level of resistance so when price returns to that level we can expect to see and or wait to see if the RSI indicator would show and support our trade idea that we could sell at that level.

So, let’s see what that would look like:

As you can see above the level outlined as a previous level of potential resistance is the 1.46933 level, it’s at this level we can expect the price to find difficulty getting past or completely declining from again to a level of support, so as price trades back up to that level as seen here, the RSI indicator exceeds the 70 line and then immediately the price drops. Now bear in mind this is a weekly chart, so each candle shows an entire week of trading, so let’s take a close look at the reaction at that level.

Here is a closer view of that price action. The chart above is a daily chart so you can see as price hits

Our level we can see an immediate reaction lower, so, if we were looking to sell, we would simply select either the put option in binary options or the sell function if we are looking to trade the cfd.

The option here varies, because if we have considered the fundamental aspect of oil, and expect it to be weaker, therefore, weakening the Canadian dollar, then our thought is that the dollar will be stronger which of course sends the price to our level, but this moves may need a correction and so the opportunity comes in that while many traders have bought quickly the price is not going to stay this way because of our technical analysis. So, we have found the opportunity and we can sell with a cfd and hedge our investment buy placing a call option or indeed buy with a cfd and place a put with our options trading.

Now your question may be, well which would be better in this case?

The truth is either, depending on your objective, now I understand that that answer doesn’t immediately provide clarity, so let me elaborate on that.

If you were to say trade the CFD and you decided to sell it, then as the market moves in your favor you, of course, will profit, what would, in this case, make it the better choice is that the more it moves the more you profit, but there is no clear point at which we will know when the market stops and turns around, so the risk in taking this trade is there. Let me show you:

Imagine you traded a CFD, and you entered to sell at (A) if the market goes down to (C) then you made a very good trade as it would almost be 700 pips, so if you had traded $1000 and entered at 1.4570 and taken profit at 1.3990 then your profit on the trade would be $1,740 approximately. So, if you had chosen to use a put option and placed it in the same position and then the option has 100% return then you would have made $1000 so 740 less.

Now the market doesn’t always have such an extended move away when it hits the resistance line, so from experience, you will learn to understand which will be better based on how fast the price moved away and to a level you are waiting for.

Lastly, I would like to go over trading stocks with IQ Option, the reason why all traders should consider stocks to trade, especially stocks that they like and understand with companies they use, is that they can build long term positions since companies have the interest in doing well and growing their share price then you can place in small positions that over time will grow.

Why would it benefit you to do so? Because while you do your usual trading you will always have a little portfolio that continues to grow for you while you may be either taking a loss or not trading because you’re on holiday.

So, how do you get into a stock, well, remember the phrase: buy low sell high. So when let’s say apple is dropping in price and you know that September is coming around the corner when they usually release the new iPhone, well you can wait till the earnings news comes out to find a level with the support and resistance price action study as well as using one of the indicators from the IQ Option library of indicators we can then take it one last step using the short cut to find the new earnings per share that IQ Option has provided for you on the platform.

As you can see to the left, here you will find the most up to date information on the stocks you love and want to see do well after all you are considering buying them for the long term or taking advantage of companies you don’t think will do that well by selling them for the long term.

Either way, IQ Option has come up with a highly unique platform and a range of products and assets for you to take to get the most out of the financial markets and carve out the career you want from them. The management will be up to you and with a huge library of technical indicators and fundamental analysis available you can design your own strategy that will be completely unique to you.

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