You should know this:
There are a ton of IQ Option trading strategies available online. Some of them work like a charm while others, well, let’s just say are a waste of time..
Today, I’ll walk you through five best trading strategies that I use on IQ Option.
But, as always; remember! No strategy guarantees 100% wins. Not even the ones on this list.
Therefore, it is prudent that you try these strategies on a demo account before going live.
1. IQ Option trading strategy #1: Momentum trading
Here is the thing; momentum trading strategy is so easy to understand. But it needs time to make profits.
Instead of trading blindly, watch your chart and wait for the traded asset to show signs of rapid movement.
At which point you should open a position in the trending direction.
What causes momentum on Trading Charts?
There are two reasons why an asset can start trending:
- Technical factors.
- Fundamental factors.
These two factors can cause an asset to be all over the place. You should, therefore, watch out for each while trading.
Take a publicly-traded company for example:
A release in earning reports or announcements of major news can trigger massive market movements depending on the kind of news.
This is what I mean:
If the news announced is positive, like the acquisition of the competitor, the price of the company stock will rise. The opposite is true. If the news is negative like a drop in profits, the stock prices will take a hit.
That is just an example of how fundamental factors control the market.
Conversely, you can talk of technical factors affecting market momentum when:
There is an announcement of a new update to the Bitcoin system, and traders deem it important to crypto trading. Chances are, traders will buy more of the coin making it to rise in price.
On the other hand, if the update could potentially harm the coin, some traders will start dumping it to create a downtrend momentum.
This reminds me:
Sometimes, an asset can develop a strong upward or downward momentum without an apparent reason or explanation.
For this reason, you should never forget to erect your stop loss orders just in case your predictions go sideways.
This brings us to the next IQ Option trading strategy for 2020:
2. Scalping strategy on IQ Option 2020.
This is where you can say small wins matter.
Scalping is a method where instead of sitting all day waiting for that huge price swing that may never happen, you set out to profit from small price movements.
When using this strategy, the deal could be as short as a couple of seconds.
What does that mean?
As a scalper, you should be prepared to act fast and make quick financial decisions.
You should have a very strict exit strategy.
Remember you are making small gains here. Without a disciplined exit strategy, a big loss can easily wipe out the small gains that you have worked so hard to accumulate.
Besides, the scalping strategy on IQ Option, unfortunately, has no room for fundamental analysis. All you have is a few seconds to a couple of minutes to make a profit.
Don’t fret though, because there are indicators perfect for this strategy.
Scalping strategy indicators.
- Use the simple moving average (SMA) and set it at either 5, 8 or 13 periods. These settings will help you identify trades that can be bought or sold to profit from these small swings.
- 5-3-3 Stochastic and a 13-period, 3-standard deviation Bollinger Bands combined to give you buy and sell signals. Apply them on a two-minute chart on IQ Option.
With that in mind, consider testing these indicators first on a demo account before shifting to the real account.
3. Pullback trading strategy on IQ Option.
Wondering how to trade asset pullbacks on IQ Option?
This is how the pros do it:
They first find an asset (this could a company stock or an ETF) that has developed a positive trend.
And then wait for it to move in the opposite direction (pullback).
One thing you should remember:
The change in direction is short-lived, and that’s why it is called the pullback. This is different from reversal.
Now, once the asset has demonstrated a pullback, wait for it to show signs of dying and then open a long position. This is because the price will start picking the pace again after retracing to the original trend.
On the other hand, if the asset is showing an established downtrend, you should wait for an upward pullback (again, not a complete change in direction). Consider opening a short position when price retraces back to the initial downtrend.
4. Breakout trading strategy on IQ Option.
This trading strategy calls for your understanding of how support and resistance levels work.
It is very common for the asset price to rise to a certain level and fail to proceed (resistance level). When that happens, the price will retrace back and start trading at the lower levels (below the resistance level).
However, IQ Option trading experts believe that whenever an asset tests the resistance level more than once, it will go through it. And when it does, it will rise higher (upward rally).
That right there is what is known as the breakout.
Therefore, if you want to use this trading strategy on IQ Option, look for assets that have demonstrated resistance levels testing at least twice. Then wait for the price to go above it and enter a buy position.
One more thing:
There are some instances where the asset price is moving freely above and below the resistance level. When you see such a setup, avoid it because it is unpredictable
Last but not least, do you love news?
The next trading strategy on IQ Option works best for fundamental enthusiasts.
5. News trading as a strategy on IQ Option.
As we have already mentioned, big news and events can influence financial markets.
In fact, almost all the instruments, be it, currency, cryptos, and stock can be greatly impacted by economic or political news.
As such, good news tends to influence an increase in the prices of the underlying asset.
On the flip side, negative news lowers it.
But here is the catch:
Predicting the major news and events before they hit the market is the hardest part.
This is because it sometimes behaves illogically – to the point of a positive news causing a drop in prices of an asset.
Wrapping up trading strategies on IQ Option.
There is no perfect trading strategy because all strategies somehow have shortcomings. You should, therefore, consider sampling several trading strategies to find that sweet spot where you can easily trade to make money on IQ Option.